Ether (ETH) traded lower on Thursday after a fresh knee-jerk reaction to yesterday’s US interest rate decision and a higher inflation outlook.
Key takeaways:
ETH dropped 7% to $2,100 on Thursday, liquidating $144 million in longs.
A break below $2,000 could trigger over $2.5 billion in additional long liquidations across exchanges.
The 50-day moving average around $2,100 is a key level to watch.
Ether risks $2.5 billion long liquidations
Data from TradingView showed 7% daily ETH price losses, with ETH/USD dropping as low as $2,140 on Thursday.
Ether’s correction is accompanied by significant long liquidations across the crypto market totaling $492.8 million over the last 24 hours. More than $144 million in long ETH positions were liquidated with Ether’s move to $2,100.
The correction occurred despite another 60,999-ETH purchase by Tom Lee’s Bitmine Immersion Technologies, which now holds roughly 4.6 million ETH, or 3.81% of the total supply.
Related: Ether accumulation data points to a rally toward $2.8K, but there’s a catch
Ether’s decline came amid fresh selling in US-based spot ETH exchange-traded funds (ETFs), which recorded more than $55.5 million in net outflows on Wednesday, snapping a six-day inflow streak, according to data from Farside Investors.
Ether’s downward momentum may increase if spot and institutional buyers don’t step back in soon.
Ether’s downside may hinge on the key $2,000 support, as a correction below would trigger over $2.5 billion worth of leveraged long liquidations across all exchanges, CoinGlass data shows.
This means a significant amount of bullish bets would get wiped out on a move lower, leaving ETH vulnerable to a sharper downside cascade if bearish momentum takes hold.
ETH price stays sensitive to FOMC risks
Ether’s bearishness today follows the decision by the US Federal Open Market Committee (FOMC) to leave interest rates unchanged after the March 18 meeting.
The chart below shows that the ETH/USD pair has declined after seven of the last eight FOMC meetings, establishing one of the clearest macro-driven fractals in its history.
ETH has set a consistent pattern as it stabilizes or rallies ahead of the meeting, then corrects sharply once the decision and the accompanying commentary hit news wires.
Typical post-FOMC drawdowns ranged between 16% and 23%, while deeper deleveraging phases pushed ETH price losses to 33%-43%.
From a technical perspective, Ether remains cautiously bullish despite macro risks. The price is retesting a key support zone near $2,100, which aligns with the upper trendline of an ascending triangle and the 50-day simple moving average (SMA).
Bulls are required to hold ETH above this level to regain their footing. It will then open the path toward the next major resistance at $2,575, where the 100-day SMA is.
Higher than that, the price could rise toward the measured target of the triangle at $2,700, 24% above the current price.
Conversely, failure to hold above $2,100 would weaken the setup, pushing ETH/USD back toward the triangle’s support line near $2,000, while putting the broader recovery at risk.
As Cointelegraph reported, a close below the 20-day exponential moving average near $2,000 would suggest that the bears are back in control, risking a deeper correction toward the next major support area around $1,800.
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