ETH Falls 20% in Four Days, Investors Brace for Further Correction

Ethereum (ETH) extended its recent downtrend, plunging to $3,119 on Dec. 20, marking a 20% decline over the past four days and a 15% drop in the last 24 hours. This bearish movement mirrored broader crypto market declines, with the total market capitalisation slipping by 9% to $3.21 trillion.

Bearish Futures Sentiment Sparks Liquidations

Futures traders have turned increasingly bearish, with aggregated premiums turning negative for the first time since Nov. 6. This shift led to Ethereum’s largest liquidation event since Dec. 9, wiping out $299 million in positions, of which $270 million were long trades.
The cascading liquidations added significant downward pressure on ETH’s price, forcing a sharp sell-off.

Ethereum ETFs Record Outflows

Investors are also de-risking through exchange-traded funds (ETFs). After 18 days of positive net flows, US-based spot Ethereum ETFs saw outflows of $60.47 million on Dec. 19. Grayscale’s ETHE fund accounted for $58.13 million of the withdrawals, marking a significant shift in sentiment.

Profit-Taking Adds to Downward Pressure

Profit-taking by short-term holders and early investors is another key factor driving the sell-off. Metrics from Santiment show increased circulation of dormant coins aged 90, 180, and 365 days, with realised losses exceeding $60 million in the past two days.

Adding to the pressure, the Ethereum Foundation sold approximately 100 ETH on Dec. 17, contributing to a 17% price drop since the sale.

Double Top Formation Signals Further Decline

Technical analysis confirms bearish momentum, as Ethereum lost support at the $3,500 psychological level. This decline validated a double-top pattern on the four-hour chart, suggesting a potential further drop to $3,000.
The bearish cross, where the 50-day SMA fell below the 100-day SMA, signals rising selling pressure. However, the Relative Strength Index (RSI) entering oversold territory hints at a possible short-term relief rally.

Investors remain cautious, watching for signs of stability as Ethereum navigates a turbulent market environment.