Crypto Shockwave! Ethereum Plunges 10% as Bitcoin Crumbles - Global Selloff Intensifies! What's Next?

Author

Aditi Singh | Whalesbook News Team

Detailed Coverage:

Ethereum's native cryptocurrency, ether, experienced a significant price drop, falling over 10% from its peak on Thursday to early Friday, as a wider selloff in the cryptocurrency market intensified, pushing Bitcoin below the $100,000 level. Ether's price tumbled from $3,565 to $3,060, wiping out all gains from the previous week, and was recently trading just below $3,200. This sharp decline occurred in tandem with falling U.S. stocks and bonds, suggesting a broad risk-off sentiment in financial markets.

Several macroeconomic and crypto-specific factors contributed to the pressure. A potential U.S. government shutdown is weighing on liquidity conditions, while the increasing probability that the Federal Reserve will keep interest rates unchanged at its December meeting is dampening investor sentiment. Since the Federal Reserve's late October meeting, U.S.-listed spot ether Exchange Traded Funds (ETFs) have seen substantial net outflows totaling $1.4 billion, with Thursday marking the largest single-day outflow in a month at nearly $260 million.

Furthermore, long-term holders of ether are also exiting their positions. Blockchain data indicates that holders who have maintained positions for 3 to 10 years have accelerated their selling, distributing approximately 45,000 ETH daily (around $140 million at current prices) on a 90-day moving average, the highest pace seen since February 2021.

Blockchain data also suggests a weakening of fundamental network activity. Monthly active addresses on the Ethereum network have fallen to 8.2 million from over 9 million in September. Transaction fees over the past month have collapsed by 42%, settling at just $27 million. Technical analysis indicates that ether has shattered a critical support level at $3,325, establishing a clear bearish trend with consecutive lower highs.

Impact: This news highlights significant volatility and negative sentiment within the cryptocurrency market, driven by both macroeconomic concerns and internal asset-specific factors. For Indian investors, it underscores the risks associated with highly speculative assets and the interconnectedness of global financial markets. While not a direct stock market event, the factors influencing crypto (like Fed policy) have broader implications. Rating: 6/10

Terms Explained: * **Ethereum's ether**: Ether (ETH) is the native cryptocurrency of the Ethereum blockchain, used for transaction fees and decentralized applications. * **Bitcoin**: The first and largest cryptocurrency by market capitalization, often considered a benchmark for the crypto market. * **Exchange Traded Funds (ETFs)**: Investment funds traded on stock exchanges, mirroring an underlying asset. Spot ether ETFs allow direct investment in ether. * **Federal Reserve**: The central bank of the United States, responsible for monetary policy, including setting interest rates. * **Liquidity conditions**: The ease with which an asset can be bought or sold without affecting its price. Poor liquidity means prices can move drastically on small trades. * **Long-term holders**: Investors who have held a cryptocurrency for an extended period (e.g., 3-10 years), believing in its long-term value. * **Bearish trend**: A market trend characterized by falling prices and negative investor sentiment, with expectations of further declines. * **Support level**: A price point at which a falling asset has historically found buying interest, preventing further declines. Breaking below it is a bearish signal.