Ethereum plummets 10%!

Three main reasons explained

Yesterday, Ethereum fell sharply from a high of $2520 to $2377, dropping over 10% in a single day, flooding the crypto space with news. Here are three core reasons:

1. Federal Reserve's interest rate hikes

Recently, U.S. inflation data has been fluctuating, and the market speculates that there may be another rate hike in July, causing the dollar index to soar to 105, with money flowing into government bonds and gold. Grayscale's Ethereum Trust (ETHE) is trading at a 12% discount to spot prices, leading to a frenzy of institutional selling that has crashed the market.

2. Regulatory pressure

The SEC hinted that Ethereum staking might be considered a “security.” If this is enforced, trading will have to delist related products, resulting in a direct liquidity shock. The EU's MiCA legislation has come into effect, and Singapore is cracking down on DeFi, causing funds to flee to Bitcoin.

3. Leverage liquidations in a chain reaction

The price has fallen below the critical support level of $2400, triggering $500 million in liquidations from algorithmic trading, coupled with Bitcoin's capital inflow, diverting demand from the main network. It's like going all-in at the poker table; if you lose, you have to cut your positions.

What to do in the short term?

The $2300-$2400 range is where institutions are looking to buy the dip; if it stabilizes, a rebound could happen, but if it drops below $2200, be cautious.

Don’t rush to buy the dip; wait for volume to increase before making a move.

For the long term, consider dollar-cost averaging into the ETH ecosystem (DeFi/NFT), but avoid going all-in.

(There is also a $20 billion Bitcoin futures settlement tonight; be cautious of volatile markets!)

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