Why is Ethereum Down Today: Reasons Behind It

Ethereum has been facing some tough times lately. Despite the majority of the altcoin market turning green, following Bitcoin's recent upward movement, ETH has shown a noticeable downward trend. Currently sitting at around $1,870, Ethereum has fallen by 18.34% in just a week.

The price fell below $2,000 for the first time since December 2023 on March 10, and despite Bitcoin showing some minor recoveries in the last 24 hours, Ether has struggled to gain any bullish momentum.

Key Factors Behind Ethereum's Struggles

Ethereum's recent struggles can be attributed to a combination of factors, starting with a significant decline in institutional interest. Ethereum ETFs have seen over $513 million in outflows in the last three weeks, signaling that large investors are backing off. On-chain data suggests the price could drop another 15% in the near future.

On top of that, Ethereum is facing more competition now. Tron (TRX), for example, has overtaken Ethereum in processing Tether transactions, and layer-2 networks like Arbitrum and Base are gaining ground in decentralized finance.

Plus, Ethereum’s profitability has also taken a hit. It was once the most profitable blockchain, but now lags behind competitors like Solana, Uniswap, and Tether, with just $210 million in profits this year.

Another key factor is social sentiment. According to the Santiment data, the number of daily active Ethereum addresses has dropped significantly from over 700,000 earlier this year to just 293,000. Plus, over half of Ethereum holders are now in the red, with 53% sitting on losses, while Bitcoin has a much higher percentage of holders in profit.

Is $1.6K the Next Stop for Ethereum?

Glassnode recently highlighted Ethereum’s cost-basis distribution to identify potential support levels. After ETH’s drop below $1,880, about 600,000–700,000 ETH were accumulated around $1,900, suggesting that $1.9K could act as a key support level if Ethereum consolidates. Glassnode also pointed out that $2.2K is the next resistance, with a thin supply gap between $1.9K and $2.2K making a short-term move toward resistance possible.

Meanwhile, anonymous analyst Ninja assumes Ethereum’s price floor is between $1,600 and $1,900, calling this range an “attractive region for commercial money.” Ninja set a swing target of $2,500, indicating a potential upside once the lower range is tested.

Can Ethereum Recover?

Despite the challenges, there's still hope for Ethereum's recovery. Its Relative Strength Index (RSI) has dropped to a record low of 23.32, signaling oversold conditions that typically precede a potential rebound. While this doesn't guarantee a recovery, if ETH can stabilize around $1.9K, a move toward $2.2K could be in the cards.

Even with recent setbacks, Ethereum co-founder Joseph Lubin remains optimistic about the future of the cryptocurrency. He expressed that he had "never been more bullish after the recent shakeout and much needed resets."

Lubin believes that U.S. government actions could help the country become more crypto-friendly, creating opportunities for decentralized protocols like Ethereum to thrive. He predicts that 2025 will be a turning point for crypto space.

For now, all eyes are on Ethereum's next moves. Investors are hoping for a turnaround, but with so many external factors at play, it's hard to say where ETH will land next. The volatility and unpredictability of the market mean that the price could either stabilize or slide further; only time will tell.