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Network updates, negative inflation, ETF applications, and more should support ETH price. Yet, it continues to follow the overall market sentiment. As Bitcoin falls below $40,000, the ETH price also starts to decline. So, how long will this last? Is the BTC drop the only reason?
Why Is Ethereum Falling?
Since January 12th, the ETH price has fallen over 13% from $2,719. With the critical $2,400 support lost, the price is at $2,333 as of writing this article. A strong support zone previously highlighted by Ali_charts is now being tested. The analyst had mentioned that if the price maintains support from a significant demand zone ranging from $2,388 to $2,460, the rally could strengthen.
The analyst’s scenario was realized before the decline, but days later, the price lost this zone. When the ETH price previously fell below this area, it lost 63% of its value and dropped below $1,000 in May 2022.
The primary reason for the decline is the negative sentiment in the general market. The gains were quite satisfying, and after ETFs began trading, the rise did not continue, which was a strong signal that sellers needed to start selling before it was too late. This was followed by individual investors selling altcoins, leading to the current situation.
ETH Price Predictions
This week, a decision is expected for Grayscale Spot ETH ETF, but since Fidelity received a postponement last week, the same outcome is anticipated. Meanwhile, the SEC still suggests that with the transition to PoS, ETH may have become an investment contract/security. It also highlights risks brought by centralized staking organizations and several other issues.
All these factors contribute to the growing negative sentiment that spot ETH ETF approval may not come this year.
Market analysts are not sharing optimistic predictions regarding Ether’s short and medium-term price performance. For example, an expert known by the pseudonym Limbo wrote that he sees a short-selling opportunity if the price closes below $2,400.
Market Profit is another expert who shares the sentiment of decline due to the negative overall market sentiment. Despite ETFs and network developments being extremely positive for ETH in the long run, the short term remains as always a place where visibility drops to zero.
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