​​Ether plunges as risk-off shock triggers sharp sell-off

​​​Ether falls out of bed

Ethereum (ETH) suffered a sharp sell-off yesterday, underscoring how fragile sentiment remains across the cryptocurrency market despite a more constructive backdrop earlier in the year.

​The over 7% down move marked one of the steepest single-day declines for ETH since mid-January and came as a convergence of macro pressure, positioning dynamics and crypto-specific headwinds hit the market simultaneously.

​Since mid-January, Ether had been trading in a relatively stable range, supported by improving risk sentiment, selective institutional engagement and confidence in Ethereum’s longer-term fundamentals.

​Prices had repeatedly found buyers on dips, reinforcing the view that ETH was consolidating rather than entering a renewed downtrend. That narrative was abruptly challenged yesterday when selling accelerated and Ether broke below short-term support levels, triggering a cascade of stop-losses and forced liquidations.

​A key driver behind the sell-off was a broader risk-off shift across global markets. Concerns about a spike higher in global yields, with the United States (US) 10-year Treasury yield rising to levels last seen in August, and the timing of future interest-rate cuts weighed on equities and other risk assets, and cryptocurrencies once again moved in lockstep.

​Ether, which tends to behave as a higher-beta asset than Bitcoin, proved particularly sensitive to the shift. As yields moved higher and despite the US dollar weakening, traders reduced exposure to leveraged positions, amplifying downside momentum in ETH.

​Derivatives positioning played a significant role in magnifying the move. In the days leading up to the sell-off, futures data showed a steady build-up of long exposure as traders positioned for a potential upside break. When prices failed to extend higher and began to roll over, funding rates quickly turned less supportive and liquidations gathered pace. The rapid unwinding of leveraged longs added fuel to the decline, pushing Ether lower than spot-market selling alone would likely have achieved.

​Institutional flows also contributed to the pressure. Since mid-January, activity in Ether-linked exchange-traded products has been mixed, with inflows into some newer spot products offset by outflows from older trusts. Yesterday’s risk-off move coincided with renewed caution among institutional investors, reinforcing the perception that, while ETH remains strategically attractive, capital deployment is becoming more selective and tactically driven. The absence of strong dip-buying from larger players during the initial phase of the sell-off left the market vulnerable to deeper losses.

​Crypto-specific sentiment factors added another layer of strain. Ongoing debates around network economics, layer-2 fee dynamics and competition among smart-contract platforms have kept Ethereum under closer scrutiny than Bitcoin during periods of stress. While none of these issues represent an immediate threat to the network, they have contributed to a more cautious tone, making Ether less resilient when macro conditions deteriorate.

​Despite the severity of yesterday’s move, longer-term investors continue to differentiate between short-term price action and structural fundamentals. On-chain data still point to relatively tight liquid supply, with a significant portion of ETH locked in staking and long-term holdings. This has helped prevent outright panic selling, even as prices adjusted sharply lower. Some market participants view the sell-off as a reset of overheated positioning rather than a signal of deeper structural weakness.

​In the near term, Ether’s outlook will depend on whether selling pressure stabilises and whether broader markets regain their footing. A period of consolidation may be needed to rebuild confidence after the abrupt move.

​For now, yesterday’s sell-off serves as a reminder that Ether remains highly sensitive to shifts in macro sentiment and leverage conditions, even as its longer-term investment case continues to rest on network adoption, institutional relevance and ongoing protocol development.

​​Ether bearish case:

​Ether's sharp sell-off seems to have temporarily halted but downside pressure remains in play while no bullish reversal takes ETH above its $3052.66 - $3075.34 resistance zone.

​In case of the 24 December low at $2888.14 being slipped through, further downside towards the mid-December low at $2776.75 is likely to ensue.

​Ether bullish case:

​For Ether's bearish momentum to be completely reversed a rise and daily chart close above Tuesday's high at $3198.31 would need to be seen. Such a bullish reversal currently looks highly unlikely, though.

​Even if a short-term bounce were to be seen, the $3052.66 - $3075.34 resistance area may stall the bounce.

​​Short-term outlook:

Bearish while below the 20 January high at $3198.31.

​​Medium-term outlook:

Neutral with a bearish bias while below the $3447.01 December high but above the November low at $2622.43.

Ether daily candlestick chart