Ethereum retraced 3% on Tuesday, dropping below $2,300 for the first time in four days. It is experiencing its biggest decline in almost a month, amid speculation about the next price action.
The altcoin is seeing a slight buyback at the time of writing, following the massive decline. The 4-hour chart shows a green candle for the day after a consistent decline that began in the early hours of the session.
Nonetheless, the chart also explains a contributing factor to the recent decline. Since Monday, it has grappled with significant resistance at $2,340. The bulls lost the narrative the next day, leading to the decline.
A closer look at the chart also shows that the 200MA has been a tough resistance for most of the last seven days. It was also at play in the early hours of Tuesday.
Beyond the technicals, fundamentals played a major role in the recent correction. A recent analysis suggested that the consumer price index may cause massive declines. The US BLS released reports that came in worse than expected.
The data sparked several bearish responses, with investors fearing that inflation is back on the horizon, and the likelihood of a rate cut in the near future is reduced.
Traders lost massive figures following the announcement, with data from Coinglass indicating losses exceeding $316 million in the last 24 hours. The biggest liquidations happened on Ethereum, accounting for up to $74 million of the total rekt capital.
Away from the derivatives, the global cryptocurrency market cap retraced by almost 2%. PENGU is the top loser, shedding over 7%. Ethereum Classic was not spared from the downtrend, dropping 6% on Tuesday.
Ethereum Could Plummet Even Lower
Although the apex altcoin is trading slightly higher than its low. There are several indications that the decline is far from over. The Coinbase premium index, which shows institutional interest in Ethereum, is currently negative.
In recent times, as prices surged, the metric followed suit. However, this time prices are retracing, and the indicator is following the same trend, suggesting that institutional interest in the asset has also plummeted.
As interest rates decline, selling is also increasing. Exchange inflow has been on the rise since May 5, rising from 14.3 million to 14.9 million at the time of writing. Additionally, the taker buy-sell ratio is at one of its lowest values over the last six months.
On the 1-day chart, the altcoin is edging towards a key level. A closer look at the chart shows that the 50-day moving average has served as a key support. Since April, ETH has traded close to the metric, bouncing off it several times.
It may continue the trend this time. However, it will retrace to $2,240 before rebounding. If the bulls fail to defend this mark, a slip below $2,200 will follow. Interestingly, previous price movements also show that this may be the case.
Additionally, the moving average convergence divergence has not flipped positive since its bearish crossover a few weeks ago.
In summary, several bearish indicators suggest Ethereum will retrace further in the coming days. If it loses the $2,240 support, it may retrace below $2,100 and retest $2k afterward.
