​Ether remains under pressure as liquidations resume

​​​Ether remains under pressure

​Over the past few weeks, Ether (ETH) has experienced a pronounced sell-off that caught many traders off guard and underscored how even the largest altcoin remains exposed to broader market forces and technical vulnerabilities.

​What began as a modest pullback evolved into a sharp decline, driven by a confluence of macroeconomic pressures, positioning unwinds in derivatives markets, and uneven institutional participation - all of which combined to sap near-term confidence in ETH.

​Entering this period, Ether had been trading in a relatively tight range in late January, supported by the narrative that recent protocol upgrades - particularly the Fusaka rollout enhancing layer-2 throughput and reducing costs - would underpin further adoption and demand. Some market participants were also positioning ahead of anticipated macro data releases and regulatory developments, and this tentative optimism was reflected in moderate inflows into spot ETH exchange-traded products.

​The sharp downturn was triggered by a sudden shift in macro risk sentiment. Over the past fortnight, data across global markets signalled rising bond yields and growing speculation that interest-rate cuts by major central banks could be delayed or shallower than expected. Equities and other risk assets briefly faltered in response, and Ether - often treated as one of the more economically sensitive crypto assets due to its linkage with DeFi and token activity - was among the hardest hit. As risk appetite diminished, traders sought liquidity, and high-beta assets such as ETH were sold in favour of less volatile instruments. When stock markets recovered on renewed United States (US) rate cut hopes - with several hitting record highs - cryptocurrencies didn't follow suit and instead continued to slide.

​What magnified the down move was the positioning in derivatives markets. In the days before the sell-off, funding rates for ETH futures had been elevated, indicating a buildup of long exposure as traders anticipated a breakout from the recent trading range. However, once prices failed to sustain rallies and instead violated key short-term support levels, stop-loss orders were triggered en masse and liquidations rapidly accumulated. The forced unwinding of leveraged long positions exerted outsized downward pressure, driving prices lower than what fundamental selling alone might have produced and creating a feedback loop of accelerating declines.

​Institutional flows echoed this shift in sentiment. While some newer spot ETH products had seen inflows in early January, the past two weeks have seen more caution from larger allocators. Outflows from certain legacy Ether trusts and a lack of aggressive dip-buying by institutional desks highlighted a more tactical, risk-managed approach to exposure. This stands in contrast to episodes earlier in the year when institutional interest appeared more willing to absorb dips. The absence of meaningful institutional support during the initial phase of the sell-off allowed downside momentum to build unchecked.

​Ether-specific sentiment also played into the weakness. Debate over layer-2 fee dynamics - particularly surrounding the pace at which layer-2 solutions can sustainably attract volume - and rising competition from alternative smart contract platforms contributed to a more cautious tone. While none of these concerns point to structural failures, they did weigh on short-term conviction, making holders less inclined to defend lower levels aggressively.

​Despite the severity of the pullback, there are indications that the sell-off was driven more by market mechanics and sentiment than by a fundamental collapse in Ethereum’s utility or adoption. On-chain data continue to show strong staking participation; a significant portion of ETH remains locked in long-term holding profiles, reducing overall liquid supply. Additionally, developer activity and ecosystem growth, particularly around DeFi integrations and Non-fungible token (NFT) infrastructure, remain robust relative to many competing chains.

​Looking ahead, Ether’s near-term direction will be closely tied to broader market conditions. If macro volatility stabilises and crypto assets regain footing, ETH could find firmer support and potentially rebuild momentum. Conversely, renewed risk aversion or renewed tightening of financial conditions could leave Ether vulnerable to another leg of selling, especially if derivatives positions continue to be unwound.

​For now, the current sell-off serves as a stark reminder that even assets with strong on-chain fundamentals and significant developer support can succumb quickly to shifts in sentiment, leverage dynamics and macro risk appetite - particularly in periods of heightened financial uncertainty.

​​Ether bearish case:

​While Ether remains below its 8 February high at $2149.30, downside pressure remains in play with the $1,9000 region being eyed. Further down lies the current February low at $1747.01.

​Ether bullish case:

​For Ether to become short-term bullish it first of all needs to hold above its 6 February low at $1747.01 and then rise above its 8 February high at $2149.30. Only then would and advance towards the $2400 region potentially be on the cards.

​​Short-term outlook:

Bearish while below the 8 February high at $2149.30.

​​Medium-term outlook:

Neutral with a bearish bias while below the 8 February high at $2149.30 but above the 6 February low at $1747.01.

Ether daily candlestick chart