NAIROBI (CoinChapter.com)— Ethereum (ETH) has experienced a sharp decline, falling 8% to trade near $3,400 as broader crypto and traditional markets reeled from unexpectedly strong economic indicators. The market turmoil triggered over $542.1 million in liquidations, with Ethereum leading the charts at $117 million, according to Coinglass.
Economic Indicators Spark Market Turmoil
The sell-off was fueled by stronger-than-anticipated U.S. economic data, which tempered hopes for imminent Federal Reserve rate cuts. The Institute for Supply Management (ISM) reported a December PMI of 54.1, exceeding November’s 52.1.
U.S. job market trends (2009–2024). Source: Bureau of Labor Statistics
Additionally, the Job Openings and Labor Turnover Survey (JOLTS) revealed an increase in job openings, signaling continued labor market resilience.
These reports sparked a rise in U.S. Treasury yields, further unsettling investors. The recalibration of rate-cut expectations led traders to project less than a 50% chance of rate cuts before June.
Ethereum Faces Pressure From Liquidations and Staking Outflows
Ethereum bore the brunt of liquidations, accounting for a larger portion than Bitcoin, which saw $99 million in liquidations. Other altcoins, including Solana and Dogecoin, also faced pressure, with liquidations totaling $24 million and $23 million, respectively.
Ethereum staking value mirrors price volatility. Source: CryptoQuant
Over 500,000 ETH exited staking protocols in December, per CryptoQuant data. Profit-taking and short-term holder activity further exacerbated selling pressure. Santiment noted that coins less than one year old contributed to recent sales, with some holders realizing losses exceeding $6.6 million.
ETH Price Forecast: Will $3,000 Hold?
Ethereum’s price is consolidating within a symmetrical triangle pattern, with the lower boundary near $3,400 acting as critical support. A break below this level could drive ETH toward the $3,000 psychological barrier. Conversely, a rebound could position ETH to test the $3,780 resistance zone.
Ethereum struggles at $3,312 amid bearish RSI. Source: TradingView
The Relative Strength Index (RSI) hovers below neutral, while the Stochastic Oscillator suggests the asset is oversold. Futures data show over $73 million in liquidations, primarily from long positions, underscoring heightened market volatility.
The broader crypto market mirrored Ethereum’s decline, with Bitcoin falling over 5% to $96,909. Solana and other major altcoins followed suit. Traditional markets also saw declines, with the S&P 500 dropping 1.1% and the Nasdaq Composite sliding 1.9%.
The Federal Reserve’s January meeting and the upcoming CPI release on Jan. 15 will likely influence market sentiment further.
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