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Ethereum’s dip under $3.4k could signal steeper drop

source-logo  crypto.news 02 April 2024 17:13, UTC

An analyst predicts a further Ethereum price retrace below $3,000 due to thin support levels, as the asset declined 6% in 24 hours.

On April 2, the second-largest digital token, Ethereum (ETH), traded below $3,300 for the first since early March following a broad downturn in crypto markets. The total crypto market cap lost 4.4% of its value and fell to $2.6 trillion on April 2, per CoinGecko.

According to analyst Ali Charts, ETH’s correction beyond the $3,460 level may be problematic for crypto bulls targeting higher prices. The researcher cited IntoTheBlock data indicating support levels the token may consolidate around.

ETH support levels | Source: IntoTheBlock

If this thesis proves correct, ETH’s price may retrace toward $2,850 or lower. Ethereum’s daily decline has already triggered over $113 million in liquidations out of $500 million on the day. Long and short positions contributed to this wipeout, with longs bearing the brunt per CoinGlass.

The on-chain analytics provider also reported that the largest single liquidation order was an ETH-denominated position valued at $7.5 million on the crypto exchange OKX.

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Coinbase: Ethereum staking holds “hidden risks” for chain, price

While price analysis suggested additional declines for Ether prices, a Coinbase report pointed to hidden risks enshrined in Ethereum’s fast-growing restaking sector.

Restaking and liquid restaking entered defi’s scope with Eigenlayer’s initiative founded in 2021 by Sreeram Kannan, but the protocol gained a stronger foothold in late 2022 toward early last year. Per DefiLlama, the protocol has grown to over $12 billion in total value locked and is the second-largest defi protocol at press time.

Coinbase analysts David Duong and David Han opined that nontransparent staking strategies tied to Eigenlayer and spinoff protocols like Ether.fi may ultimately result in detrimental financial and security outcomes for participants.

How different issuers select which AVSs to secure alongside the distribution of risks and rewards to LRT holders remains an open question. Furthermore, the initial yield from AVSs may not live up to the extremely high expectations set by the market.

Coinbase analysts David Duong and David Han

However, both researchers believed the restaking sector would become a core part of Ethereum’s ecosystem’s infrastructure.

Read more: Ethereum stakers exit Lido for Ether.fi, Renzo