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Here is an analysis of what happened with Ethereum:
After Ethereum achieved a historic milestone by surpassing the $4,900 mark, it experienced a sudden decline and a sharp drop to $4,352 in just a few hours. This decline led to a decrease in the market value of the currency from approximately $600 billion to $529 billion.
What caused this decline?
* Profit-taking: After reaching a new peak, many investors, especially short-term traders, tend to sell their assets to realize profits. This intense selling can create tremendous pressure on the price.
* Massive liquidations: Rapid increases often lead to the opening of highly leveraged trading positions (Long Positions). When the price begins to decline, these positions are automatically closed, increasing selling pressure and accelerating the pace of the decline.
* Correlation with Bitcoin: Ethereum often follows the movement of Bitcoin. Since Bitcoin also declined during the same period, this negatively affects Ethereum and the rest of the cryptocurrency market.
These fluctuations are a constant reminder that the cryptocurrency market is highly dynamic. It is always essential to conduct your own research and exercise caution, especially when trading with leverage.
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