Cryptocurrencies have been weakening recently, with Ethereum falling below the $1,800 mark yesterday, dipping as low as $1,767—nearly erasing all gains since October 2023 and halving its value from last December’s high of $4,000.

A Potential 10% Swing Looms in the Coming Week

Regarding Ethereum’s trajectory, Matrixport’s analysis today notes that since hitting a peak of $3,668 on January 7, 2025, Ethereum has already declined by 50%. On-chain activity across the Ethereum ecosystem has slowed significantly, while weakening fundamentals and persistently low demand for ETH have tilted market sentiment noticeably bearish.

Matrixport highlights that with several key risk events approaching, the derivatives market is pricing in a 10% swing (in either direction) within the next week. Notably, Ethereum’s price is gradually nearing the lows seen during the FTX bankruptcy period, with FTX expected to begin repayments to major creditors on May 30, 2025.

A 20% ETH Drop Could Trigger Over $336 Million in Liquidations

As the market enters the second quarter, Bitcoin and Ethereum face a dual test from macroeconomic and technical factors. Currently, BTC is oscillating between $80,000 and $86,000, while ETH fluctuates between $1,600 and $2,200.

The Trump-proposed 25% tariff policy, set to take effect on April 2 targeting goods from Mexico and Canada, has sparked fears of a renewed trade war. The correlation between crypto assets and traditional markets is rising, with BTC’s correlation to the Nasdaq reaching 0.67. If U.S. stocks weaken further, it could drag the crypto market down with it.

Additionally, ETF fund flows are showing divergence: BTC ETFs continue to attract capital, while ETH ETFs see consistent outflows, indicating a growing institutional preference for Bitcoin.

Data suggests that a 20% drop in ETH from its current price would trigger over $336 million in liquidations, primarily concentrated on DeFi lending platforms. ETH’s heavy reliance on leveraged protocols could lead to cascading sell-offs, making $1,600 a critical support level. A break below this threshold could accelerate the downward spiral.

Disclaimer: None of the information contained here constitutes an offer (or solicitation of an offer) to buy or sell any currency, product or financial instrument, to make any investment, or to participate in any particular trading strategy.