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After a relatively calm start to the week in the cryptocurrency market, Ethereum and Bitcoin, the two major crypto assets, have resumed their decline as of today.
Increased risk aversion in global markets and weakening investor appetite have increased pressure on digital assets.
Ethereum ($ETH) fell by as much as 6.2% during the day, dropping to $1,989. $ETH, the second-largest market capitalization after Bitcoin, has experienced sharper losses compared to Bitcoin since the sharp sell-off in October.
Ethereum has lost more than 40% of its value since the peak of the cryptocurrency market. Assets with lower liquidity and those described as “high beta” generally exhibit more volatile movements compared to market leader Bitcoin.
Vetle Lunde, Research Director at K33 Research, stated that the weakness in Ethereum stems from the rapid rise experienced last fall. Lunde explained that the heavy inflows into $ETH ETFs and digital asset products, as well as the sharp increase in open positions, have made the market fragile.
Bitcoin ($BTC) fell by as much as 3.5%, dropping to $67,878. After hovering around $70,000 over the weekend, $BTC had fallen below that level on Monday. On Friday, it briefly approached $60,000 before recovering.
Bitcoin has largely erased the gains it made since US President Donald Trump’s re-election at the end of 2024. Despite the administration being seen as crypto-friendly and providing support to the sector, Bitcoin recently recorded its longest monthly decline since 2018.
Mercuryo CEO Petr Kozyakov stated that the market is still searching for a clear direction, and that the effects of last week’s sharp sell-off are lingering. According to Kozyakov, analysts are trying to understand which direction the market will take in the short term.
A downward trend is also noticeable in the Bitcoin derivatives market. The fact that funding rates in perpetual futures contracts remain in negative territory indicates that investors continue to take short positions. Kaiko Research Analyst Adam McCarthy stated that funding rates are significantly negative and that market sentiment is quite weak, especially in smaller-cap altcoins.
$BTC Markets analyst Rachael Lucas stated that Ethereum’s technical downtrend continues after it broke below the $2,800–$3,000 range. According to Lucas, the current sell-off is driven by a growing risk-aversion trend on a macro scale and overall weakness in the crypto market.
*This is not investment advice.