- Ethereum has rebounded nearly 10% to $1,550 after hitting a two-year low, offering short-term hope, but DeFi liquidations and market challenges could put further downward pressure on its price.
- Despite strong network metrics, Ethereum still faces significant hurdles, including macroeconomic concerns and delayed upgrades, as it struggles to recover from its 67% decline from all-time highs
Ethereum (ETH) has seen a notable recovery, bouncing nearly 10% to $1,550 after dipping to a two-year low of $1,410 earlier this week. This sharp rebound offers a glimmer of hope to investors who experienced the cryptocurrency’s dramatic 27% drop within just 48 hours. However, despite the short-term recovery, significant challenges remain that could impact Ethereum’s price moving forward.
DeFi Liquidations Amplify Price Volatility
The dramatic price drop caused a ripple effect across Ethereum’s derivatives markets, with about $370 million worth of leveraged ETH futures sold over a span of just two days. The sell-off, primarily driven by short-term holders, resulted in staggering losses of nearly $500 million in a single day, according to Santiment data.
The DeFi sector was hit hard as well. Lending platform Aave witnessed $162 million in collateral liquidation, while Sky (formerly Maker) liquidated a whale’s 53,074 ETH, valued at approximately $74 million. With more potential liquidations in the pipeline, Ethereum could face additional selling pressure, especially with a whale holding 220,000 ETH at risk of a forced sale if the price falls below $1,119.
Professional Traders Hold Out Hope Despite Market Weakness
Despite the severe price correction, professional traders are not fully abandoning the market. The ETH options skew remains negative, but not to the extreme levels often seen at market bottoms. Additionally, the monthly futures premium has risen slightly to 4%, suggesting that there is still some resilience in the market, albeit cautious.
Ethereum’s Strong Network Metrics and Future Prospects
On a positive note, Ethereum’s network continues to show underlying strength. The total value locked (TVL) on Ethereum’s network reached 30.2 million ETH on April 6, marking a 22% increase from the previous month. This growth outpaced competitors like Solana and BNB Chain, signaling continued faith in Ethereum’s long-term potential.
However, Ethereum is still down over 67% from its all-time high of $4,864 in November 2021, indicating the need for significant recovery to reach previous peaks.
ETH/USD Technical Outlook: Key Levels to Watch
Ethereum is currently navigating through critical support and resistance levels. If ETH manages to hold above the $1,550 level, it faces resistance around $1,620. A decline could see ETH testing support at $1,505, followed by the psychological $1,000 mark if the downtrend persists. On the upside, ETH faces stiff resistance near $1,700, with more hurdles at $1,720 and $1,820.
While Ethereum’s rebound provides short-term optimism, challenges such as potential DeFi liquidations, macroeconomic factors, and the delay of the Pectra upgrade continue to weigh on sentiment. Investors should stay alert as Ethereum faces a pivotal moment in its price recovery.
