• Ethereum’s price has dropped below $1,600 after a sharp downturn on Tuesday.
• Santiment suggests that FUD may have been the trigger for this decline.
• Profit-taking and the wormhole attacker’s dumping of ETH tokens on the open market were also contributing factors.
The price of Ethereum has seen an incredible two week rally, but it seems to be running out of steam. On Tuesday, ETH dropped once more below $1,600, with growing FUD and profit-taking being the main culprits.
According to Santiment, Ethereum’s social dominance has grown rapidly in the last couple of days. While this can sometimes be a good thing, it is a sign of FUD in this case. Ethereum is now dominating 21% of cryptocurrency discussion on social media, which could have been the trigger for the price decline.
In addition to the FUD, profit-taking has been ramping up as the price of Ethereum has been increasing. A report from Bitcoinist showed that many investors had been taking profits, and Santiment noted a spike in the profit-taking ratio on January 20. This profit-taking, combined with the FUD, has presented a recipe for disaster for the digital asset.
Another event that had an effect on Ethereum’s price was the Wormhole attacker moving stolen funds around. On Monday, the attacker moved over $155 million in ETH to OpenOcean, which they then exchanged for staked ETH tokens such as stETH and wstETH. The dumping of these coins on the open market caused sell pressure on ETH, further contributing to its decline.
Overall, Ethereum’s price has seen an impressive rally over the past few weeks, but it appears to have run out of steam. FUD, profit-taking, and the Wormhole attacker’s dumping of ETH tokens all seem to have been contributing factors to the decline. As the market continues to be volatile, it remains to be seen if Ethereum can recover from this dip.