Ethereum (ETH), the leading digital currency, fell out of its narrow range on Friday, indicating the beginning of a sustained downward trend expected to continue into the new week. Ethereum dropped below $2,300 for the first time in a month, amid escalating tensions between the US, Israel, and Iran yesterday.
The breakout has led to increased selling pressure in the Ethereum futures market, raising concerns about a deeper decline in the future.
Ethereum bears tighten their grip
The bearish bias toward Ethereum is reflected in the buy/sell ratio for buyers, which has shown consistently negative values since Friday. At the time of publication, it stood at 0.93, indicating dominance of sell orders over buy orders in the Ethereum futures market.
The buy/sell ratio of an asset measures the relationship between buying and selling volumes in the futures market. Values above one indicate greater buying volume than selling volume, while values below one suggest that more futures traders are selling their holdings.
The continuous decline in Ethereum's buy/sell ratio in recent days indicates an increase in selling among futures traders. This increasing selling pressure confirms a decline in sentiment and could accelerate price declines if it continues.
Moreover, the price of Ethereum (ETH) remains well below its twenty-day exponential moving average (EMA), reflecting the bearish trend surrounding the asset. At the time of writing, this key moving average represents dynamic resistance above Ethereum's price at $2,497.
The twenty-day exponential moving average measures the asset's average price over the last twenty trading days, giving more weight to recent prices. When the price falls below the twenty-day exponential moving average, it indicates short-term bearish momentum and suggests sellers' control over the market.
This further confirms the weakness of the bullish structure around ETH as the asset struggles to regain short-term trend support.
Can Ethereum maintain its support line?
Ethereum is currently trading at $2,272, down 6% amid a broader market decline. With increasing selling pressure in both spot and futures markets, Ethereum faces the risk of heading toward the support level at $2,185.
If this support fails, the price of ETH may drop further to $2,027.
However, if buying pressure gains gradual momentum, ETH's price could recover and rise to $2,424.