Ethereum is at risk of falling below the $2,900 threshold: Bulls retreat

On Tuesday, Ethereum (ETH) price peaked at $3,443, but has since seen a correction. At the time of writing, the price is trading at $3,063, down 3% in the past 24 hours.

With the decline in bullish signals, Ethereum price is at risk of falling to $2,900. This analysis explains why this scenario is likely to happen in the short term.

Ethereum Traders Reduce Activity

Ethereum’s price decline over the past few days has been accompanied by a decrease in trading volume. In the past 24 hours, total trading volume reached 35 billion USD, down 25%.

The price decline indicates that demand for the asset has weakened as sellers outnumber buyers. The simultaneous decline in ETH price and volume signals weakening momentum, which could mark the end of the bullish trend.

Traders often interpret this trend as a lack of determination from the market community, which reduces activity and can lead to a self-reinforcing cycle of falling prices and volume.

Furthermore, Ethereum open interest fell to a seven-day low on Thursday, confirming a decline in market activity. According to Santiment data, the coin’s open interest, which measures the total number of outstanding contracts in the derivatives market, currently stands at $8.26 billion. It has dropped 12% since Monday.

When open interest decreases, existing contracts are closed instead of opening new ones. During bullish periods, a decrease in open interest indicates that traders are locking in profits or limiting losses by closing their positions.

As in the case of ETH, this occurs near the top of a price trend, when traders tend to protect profits against a potential reversal scenario.

ETH Price Prediction: Coin Targeting Below $3,000

Ethereum is trading at $3,063, hovering just above key support at $2,942. If market activity continues to be tepid, this altcoin could test this support level. Failure of the bulls to defend this level could lead to a deeper decline towards $2,787.

Conversely, an improvement in market sentiment and renewed demand could cause ETH to recover from the $2,942 support and restart the uptrend. This recovery could push Ethereum price above the $3,162 resistance level and potentially reach a cycle top of $3,443.

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