Reasons Behind Ethereum’s 11% Price Drop

The main catalyst for Ethereum’s downward trend was the exit of investors from high-risk assets, which began after the strengthening of the U.S. dollar. Rising yields on U.S. government bonds and the risk of a government shutdown after October 1 further fueled the flight to safe-haven instruments, according to experts from a Japanese company.

“The technical picture also played a negative role. Ethereum failed to hold above the resistance level of $4,500–$4,600, and the break of the support level around $4,200 triggered a wave of sell-offs. Additional pressure came from profit-taking at local highs, which accelerated the downward move,” analysts explained.

The growth of Bitcoin dominance and the seasonal weakness of altcoins added to the negative backdrop. The validator exit queue lengthened, and staking volumes decreased, limiting the natural demand for ETH, noted XWIN Research Japan.

Analysts described Ethereum’s correction as mainly technical in nature and not a reflection of weakness in the network’s fundamentals. The price decline could create favorable conditions for long-term investors looking to increase their ETH positions at more attractive levels.

The ongoing sell-offs can be seen as a market cleansing, forming a more sustainable base for the next upward cycle, XWIN Research experts concluded.

Earlier, Citibank’s research department specialists reported that macroeconomic conditions and the volatility of the digital asset market had created conditions for the realization of a neutral scenario for Ethereum’s price changes.

See also: "Bitcoin Falls Below $110,000 Amid Options Expiry"

#Ethereum (ETH) #Price drop

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