ETH Price Breaks Below Key Support Level, What Next?

Ethereum native cryptocurrency ETH’s price is currently at a critical juncture courtesy of its recent decline.

It has retested its Q4 2024 support level, but on-chain data reveals that weak demand could potentially lead to more capitulation.

ETH previously crashed below the same support at the start of February but a swift recovery followed suit.

Earlier the price appeared to be respecting the same support level near the $2,350 price zone.

It has since dropped below the level, declining to the next support level at $2160.

Analysts anticipate the support level to hold, but weak demand may pave the way for a break below support.

This is a possibility, especially considering that the RSI was not yet in oversold territory at the time of observation.

ETH exchange flow data revealed that more ETH was flowing into exchanges than the amount of ETH flowing out.

Exchange inflows were almost clocking 440,000 coins compared to just over 354,000 coins in exchange outflows.

After the dip below the current support level means ETH price was seen changing hands at $2162.06, at the time of writing.

ETH Price Struggles with Weak Market Sentiment and Institutional Outflows

This possibility or more downside is further supported by the fact that the market’s fear and greed index slid further into extreme fear in the last 24 hours. On top of that, Ethereum ETFs continue to experience outflows.

Ethereum ETF flows have been negative for the last 5 consecutive days. They recorded $94.3 million worth of outflows in the last 24 hours, with Blackrock leading with the highest amount of outflows.

Institutional outflows further signal a lack of confidence under the current market conditions.

This further aligns with the higher sell pressure that has been choking out bullish volumes.

The possibility of a bullish comeback remains foggy considering these observations.

Nevertheless, the market has a tendency of pivoting when least unexpected.

The good news for the bulls is that whales have been dollar-cost averaging on the way down, although data also reveals that they have been moving cautiously.

Derivatives Traders Pump the Brakes After Recent Liquidations

Speaking of caution, things in the derivatives segment have been quite shaky recently.

Over $440 million worth of long liquidations occurred just in the last 5 days.

The level of liquidations was notably lower than it was at the end of January.

One of the main reasons for this was that open interest and appetite for leverage were notably lower this week compared to 4 weeks ago.

The lower market confidence, along with the declining sentiment and liquidations may further spoof derivatives traders.

It is worth noting that both the estimated leverage ratio and open interest ticked up in the last 2 days.

Perhaps an indication of bullish expectations after the latest support retest.

While that may be the case, spot flows remained negative, indicating another possibility of liquidations.

These findings suggest that leverage shake-down may still be at play and this could hinder a sizable bullish recovery.

In other words, there is a solid possibility that ETH price could slide below $2,000 if the sell pressure prevails.