The price of ethereum has been among the hardest hit by the sudden drop that took place on Monday. The drop saw the asset's price fall below $2,200 for the first time in the last week and has continued a downward trend at this point. As the market shows some recovery momentum, questions remain about what may have triggered the decline.
ethereum price fell because whales have been selling
One of the most obvious causes of the sudden drop that affected the price of ethereum is the fact that large holders have been selling. This month, eth hit its highest level in the last year and this brought many investors back into profit. Now, since there has not been a complete bullish rotation of the cryptocurrency market, there are expectations that the market could crash and investors are trying to lock in profits before this happens.
Cryptographic analyst Ali Martínez marked sales of these large forks in a post on X (formerly Twitter) on Sunday. According to him, these large holders had actually started selling when the price first surpassed $2,300. This means that selling pressure had been building for a while before being reflected in the price.
Whales holding more than 10,000 eth in their balances had been reducing their holdings towards the end of November. By December, their holdings had fallen to their lowest point in the last three months, demonstrating massive selling by these whales.
<img decoding="async" class="aligncenter size-medium" src="https://technicalterrence.com/wp-content/uploads/2023/12/Why-has-Ethereum-price-dropped-to-2200-today" alt="Tradingview.com ethereum Price Chart” width=”3266″ height=”1530″ loading=”lazy”/>
eth price at $2,242 | Source: ETHUSD on Tradingview.com
Uncertainty over macro factors
Macroeconomic uncertainty has also played a role in the cryptocurrency crash that sent the price of ethereum to $2,200. An example of this is the release of CPI data which is expected to take place on Tuesday. As investors eagerly await the results of the announcement, fluctuations in the market are expected.
November inflation data is also expected to be released this week, as is the Fed's decision and statement on Monday. Ahead of these events, high volatility is always expected as investors move to secure some of their positions.
However, ethereum has started to show bullish momentum once again. It has since rebounded from its lows of $2,170 and has climbed back above $2,000, where the bulls are already providing plenty of support. If bitcoin price continues to rise, ethereum could reclaim the $2,300 level before the end of the day.
The price of eth stands at $2,238 at the time of writing, down 4.50% in the last 24 hours.
Featured image from Quora, chart from Tradingview.com
