Will Ethereum Hold $1,850? Growing Fear of Decline Amid Massive Long Liquidations

▲ Ethereum (ETH), cryptocurrency decline/AI generated image ©

Amid macroeconomic instability, geopolitical tensions, and massive long position liquidations, Ethereum (ETH) is now defending the $1,850 support level.

According to cryptocurrency market aggregator CoinMarketCap, as of August 1 (local time), Ethereum was trading at $1,866.85, down 1.19% over 24 hours. While Bitcoin (BTC) fell by 1.25% during the same period, the 24-hour correlation coefficient between ETH and the Invesco QQQ Trust (a Nasdaq 100 ETF) recorded 0.888. This indicates that risk assets, sensitive to interest rate changes, showed a synchronized weakness.

Market analysts attributed the risk-off sentiment to hawkish dissents from the US Federal Reserve meeting on July 29 and escalating tensions between the US and Iran. This decline was more characteristic of a broader market correction due to deteriorating macroeconomic conditions and reduced liquidity, rather than specific negative news for Ethereum alone. Key variables that could influence investor sentiment include the upcoming US employment figures and the potential easing of tensions in the Middle East.

Intense selling in the spot market and derivative liquidations also exacerbated the decline. On-chain data revealed that a whale investor sold their holdings at market price, from $1,930 down to $1,860. Furthermore, over $68 million in long positions were liquidated in just 45 minutes, creating a cascading downward pressure. The increased authority for corporate treasuries to sell Ethereum holdings also contributed to localized selling pressure. The current funding rate is 0.00475%; future stability of the funding rate and a decrease in open interest will be indicators to assess the exhaustion of selling pressure.

Technically, ETH is testing the 50-day exponential moving average at $1,845 and the 38.2% Fibonacci retracement support at $1,831. If the $1,850-$1,873 range is held, a rebound towards $1,895 is possible; however, if $1,850 breaks, the risk of a further decline to $1,800 increases significantly. To reverse the short-term bearish trend, the daily closing price must recover $1,895. The outcome of the vote on the US crypto market structure bill, the Clarity Act, scheduled for August 3, is also a critical variable that will influence regulatory investor sentiment.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*