Ethereum Drops 5% Below $2,000 Mark Amid Weakening Institutional Interest

Ethereum's price closed below the $2,000 mark on March 22, experiencing a 5% decline from the weekly high of $2,067 recorded just 24 hours prior. This drop has raised concerns among short-term traders about a potential reversal, with the price at risk of falling back to $1,850.

Ethereum's price showed promising gains earlier in the week, rising 10% from $1,760 to hit $2,065. This rally was driven by positive market sentiment surrounding the successful deployment of its Hoodi update. However, the optimism was short-lived, as the price failed to sustain its gains for more than 24 hours.

Trump’s appearance at a digital asset summit boosted market momentum, driving ETH price above the $2,067 mark. However, despite opening trading above $2,000 on Friday, ETH bulls were unable to maintain the rebound, and the price rapidly plummeted below the $2,000 mark, closing around $1,965.

Ethereum’s derivatives market reflects a mixed sentiment, with open interest holding at $19.94 billion, barely above the $20 billion threshold. This drop in open interest, coupled with a 26.7% decline in trading volume to $22.80 billion, indicates a reduction in institutional speculation. Options open interest has also fallen by 5.45% to $5.88 billion, suggesting that institutional speculators are scaling down their exposure to Ethereum.

Liquidation data provides further insights into the recent negative sentiment. Over the past 24 hours, total liquidated positions reached $24.63 million, with $17.18 million in long liquidations and $7.45 million in short liquidations. This suggests that bullish traders were over-leveraged before the recent price correction. Additionally, $3.47 million was wiped out in the past four hours, reflecting the market’s vulnerability to sudden price swings.

ETH price is currently trading just above the $1,900 mark. However, derivatives trends suggest caution is warranted if ETH stagnates near $2,000. The long/short ratios on major exchanges like Binance and OKX show bullish positioning from traders, with top traders on Binance maintaining a 4.16 long/short ratio. This suggests that traders may be entering fresh bullish positions after the recent profit-taking phase.

A prolonged lack of directional momentum could deter speculative traders and prompt existing holders to close ETH positions in search of more volatile assets. In this scenario, further declines in market participation could drive open interest below $20 billion, weakening key support levels around $1,850 and exposing ETH to potential downside risks.

Ethereum faces key support at $1,900, with a critical level at $1,850. A drop below this level could trigger further downside toward $1,800. The recent decline in trading volume and weakening market interest among short-term traders have contributed to the price drop below $2,000. The derivatives market, with falling open interest and options volume, indicates reduced institutional speculation, affecting ETH’s ability to sustain bullish momentum.