Ethereum Drops 3.34% Amid Market Selling Pressure, Layer-2 Concerns
1min read On March 30, Ethereum experienced a temporary drop below $1800, marking a significant moment in its recent price volatility. The cryptocurrency briefly fell to this level before rebounding, currently trading at $1814, reflecting a 24-hour decline of 3.34%. This price movement comes amidst broader market selling pressure, with Ethereum challenging critical support levels around $1805. The drop was particularly notable as it occurred after a period of relative stability, with the cryptocurrency previously trading around $1900.
The price decline was rapid, with Ethereum plummeting 5% within half an hour, reaching as low as $1900. This sudden drop triggered a panic sell-off, as indicated by the Relative Strength Index (RSI) showing heavily overbought levels. Despite a brief golden cross, which typically signals a bullish trend, the downward momentum persisted. Ethereum's price continued to fluctuate, eventually finding support at $1877 before dropping further to a 24-hour low of $1861. The cryptocurrency has since shown signs of a gradual uptrend, but it remains to be seen whether it can sustain this recovery.
Ask Aime: What caused Ethereum's sudden price drop?
The recent price drop has raised concerns about the potential for further declines. If the price remains below $1800, the downward trend could accelerate, leading to a significant drop in value. This bearish sentiment is compounded by the rise of Ethereum Layer-2 networks, which some industry experts argue are "siphoning value" from the primary layer. These Layer-2 solutions, initially designed to scale Ethereum by reducing transaction costs and increasing throughput, are now seen as 'extractive,' capturing the majority of user transactions and fees without fairly compensating the Ethereum network. This has led to a 99% plummet in Ethereum's fee revenue in recent months.
The decline in Ethereum's price has also been attributed to a broader loss of investor interest. The ETH/BTC ratio is at its lowest in around five years, indicating a troublesome period for Ethereum. Despite these challenges, some investors remain bullish about Ethereum's future. Major financial institutions have revised their predictions for ETH, although these revisions have been significant cuts. The debate regarding Ethereum's future continues, with its relationship with Layer-2 solutions playing a critical role in determining its fate.
