ETH may not survive the recent 10% drop despite panic selling by short holders

Ethereum price today: $3370

• Short-term owners of Ethereum have been panic selling, with some realized losses exceeding $60 million.
• The calmness of long-term owners and the decline in foreign exchange reserves indicate that the price drop could be temporary.
• ETH could fall to the psychological level of $3000 after confirming the double top pattern on the daily time frame.

Ethereum (ETH) fell below the key support level of $3,550 on Thursday following downward pressure from the Federal Reserve’s (Fed) rate cut decision. However, on-chain analysis shows that the price drop may not last long as long-term holders have remained silent despite bearish sentiment.

Ethereum on-chain metrics show that the price drop could be temporary

Ethereum is on track for one of its worst weekly performances since the last week of July after dropping over 10% over the past four days.

The decline was accelerated by the Fed’s adjustment of projected rate cuts in 2025 from four to two despite a 25 basis point rate cut on Wednesday.

The performance was terrible for ETH compared to most of the other cryptocurrencies in the top ten, erasing its recent gains against Bitcoin and Solana.

Inactive coin circulation metrics show that most of the recent selling activity has come from investors who bought ETH over the past year or short-term holders (STH), which is reflected in the slight increase in inactive coins aged 90, 180, and 365 days.

ETH circulation inactive coin (STH) | Sentiment

The network’s realized ETH profit/loss reveals that most of these STHs are selling at a loss, with realized losses exceeding $60 million in the past two days.

However, long-term holders (LTH) have been left facing recent price declines as reflected in their downtrend in the chart below. Unlike the panic selling during price drops, LTHs have partially taken profits whenever ETH has seen a significant rally over the past few months.

ETH Idle Coin (LTH) Circulation | Sentiment

Since LTHs have not been part of recent selling activity, the decline may not last long as prices historically recover quickly on such occasions. Therefore, it is important to watch their behavior in the following days. If they don’t join the sales train, the recovery could happen quickly.

In addition, Ethereum’s foreign exchange reserves have fallen over the past three days, indicating that investors are buying the dip.

Ethereum Exchange Reserve | CryptoQuant

A similar trend is also seen in ETH exchange net flows, showing that exchanges such as Binance, OKX, Bybit, Kraken, and Bitstamp saw higher withdrawals, according to data from Coinglass.

Meanwhile, Ethereum ETFs extended their inflow streak to eighteen consecutive days with net inflows of $2.5 million on Wednesday.

Ethereum Price Forecast: ETH Could Fall to $3000 After Double Validation

Ethereum has suffered over $220 million worth of liquidations in the past 24 hours, with long positions liquidated amounting to nearly $200 million, according to data from Coinglass.

ETH has broken below the $3,550 support level with a big drop in volume as market participants are still reacting to the Fed’s hawkish 2025 rate cut decision.

ETH/USDT Daily Chart

The drop confirms the double top pattern that ETH has formed over the past two weeks.

After experiencing a bounce near its annual high resistance of $4,093 on December 6th, ETH formed a low by falling to a neck support level near $3,550. ETH bounced back from $3,550 and briefly recovered before being rejected again at $4,093.

With the recent large drop in volume below the $3,550 neckline support, ETH could sustain a decline towards support near the psychological $3,000 level if buyers fail to outpace sellers. This target is obtained by measuring the height of the drop from the top of the price to the neckline.

However, the $3,250 support level could help prevent such declines.

The Relative Strength Index (RSI) is falling below its neutral level, indicating growing bearish momentum.

Notably, the RSI on the daily chart develops a trend where ETH often sustains a decline when it sees a bounce near its yellow moving average line.

On the other hand, the stochastic oscillator (Stoch) has moved into oversold territory, indicating that prices may soon recover from the recent decline.

A daily close of the candle above $3,550 will invalidate the thesis.