Tron founder Justin Sun asked the cryptocurrency community about the situation with Ethereum, noting that in the past two weeks, the liquidation amount for Ethereum reached $2.1 billion. On Monday, Sun pointed out the high leverage trading issue on the Ethereum network, which he believes could lead to losses for decentralized financial protocols using the blockchain.
As of Thursday's Asian morning trading session, the value of ETH was $1,880, having dropped 51.63% over the past three months, while during the bull market in December, it had reached $3,888. According to Coingecko data, shorts have pushed the cryptocurrency down by 30.6% in the past 30 days and nearly 18% in the past week.
Market observers commented on Ethereum's predicament.
Justin Sun's question received numerous responses from the crypto community, including a controversial reply from Alexander, founder of the AI crypto finance system PostFiat, who noted that Ethereum has been unable to maintain meaningful trading growth since its peak in 2017.
Alexander harshly criticized the network for failing to achieve deflation when transitioning from a proof-of-work (PoW) model to a proof-of-stake (PoS) model, pointing out that the most actively used parts of the blockchain, such as Arbitrum (ARB) and Base, either have extremely high inflation rates or are highly centralized.
“Therefore, the question arises... what is the meaning of this chain? The answer is: just like all other blockchains. Transferring Tether and 'storing value', to be honest, it's quite frustrating,” he commented.
In a post on X on March 13, CryptoQuant CEO Ki Young Ju shared a chart showing record selling pressure on Ethereum over the past three months. On-chain data shows that $1.8 billion worth of ETH flowed out of exchanges last week, marking the largest outflow since December 2022.
Additionally, CryptoQuant data also shows that options trading volume decreased by 7.43% to $663.71 million, but open interest in options increased by 2.17% to $5.77 billion, indicating a growing demand for long derivative positions as traders wait for ETH's price movements.
Will Ethereum recover?
As of now, Ethereum's price trend looks fundamentally bearish; bulls are gradually relinquishing control to bears, further dragging down the cryptocurrency's price. According to Coinglass, the liquidation amount for ETH futures reached $43.12 million in the past 24 hours.
Among them, the long liquidation amount was $26.94 million, and the short liquidation amount was $16.18 million, indicating a lack of clear direction in the market.
Analysts have outlined two possible scenarios for Ethereum's next move. A bearish breakout could see ETH fall below the $1,440 threshold and potentially trigger further declines towards the $1,000 mark. On the other hand, breaking through resistance near $1,960 could help the token gain some positive momentum, potentially pushing it towards $2,200.
