Ethereum Ether just fell more than 20% on Tuesday in a two-day rout that almost resembles the October 10 crash.
Trading just below $4,000 early Monday, the second-largest cryptocurrency by market capitalization fell to nearly $3,000 Tuesday afternoon in the United States, touching its weakest level since mid-July. This is the second severe correction in a month, with the October 10 flash crash sending ETH down to $3,440 from just under $4,500 the day before, a 25% drop.
ETH was recently trading just above $3,200 after a modest rebound, still down 9.4% over the past 24 hours.
The sharp decline triggered more than $970 million in liquidations across leveraged ETH derivatives markets, according to CoinGlass data. Most of these positions were long – traders betting on higher prices – erased as ETH broke through support zones one after another.
Markus Thielen, founder of 10x Research, warned in a Tuesday note that ETH’s breakdown leaves little support underneath and more room to fall.
BitMine, the largest ETH treasury company that has steadily purchased the asset over the past few months, appears to be fully leveraged with limited ability to bid for ETH, Thielen said.
BitMine has accumulated nearly 3.4 million ETH, with Thielen estimating the company’s cost base at around $3,909, which would mean the company would be sitting on around $2 billion in unrealized losses.
“While there is no immediate liquidation risk, the real concern is who will be the next additional buyer of ETH now that BitMine appears to have exhausted its firepower,” Thielend said.
Demand for ETFs has also faded. Inflows reached $9.5 billion in July and August as BitMine accelerated its purchases, but have since dried up, Thielen noted. Only $850 million has been withdrawn from ETH ETFs since the October crash, leaving room for more selling as many ETF investors are now underwater at current price levels.
Retailer interest has also plummeted, Thielen said. Google search trends, a rough indicator of retail demand, for Ethereum are down 13% from their peak.
With all the catalysts that fueled ETH’s rally to near $5,000 in August now gone, Thielen sees the $2,700 to $2,800 range as the next likely landing zone.
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