Ethereum on the Brink: Imminent Collapse or Miraculous Rebound?

ETH Price Hits Critical Support at $1,750: Uncertainty Takes Over the Market

After three months of free fall, Ethereum (ETH) is at a crucial inflection point. The price touched the key horizontal support at $1,750, triggering alarm among investors. With a 1.11% drop in the last 24 hours and options open interest at historic lows, are we witnessing the prelude to a collapse or the start of an unexpected rebound?

The prevailing trend is bearish as long as ETH trades below $2,100 / TradingView

The Ethereum market is on tenterhooks. After six consecutive days of losses, ETH closed Sunday at $1,807.74, 21.4% below the 50-EMA and 35.4% below the 200-EMA. Trading volume plummeted to 327,084 ETH, well below the average of 387,380 ETH (on Binance), indicating a lack of conviction among both buyers and sellers.

Where's the bottom?

Technical analysis reveals a grim picture. Key resistance lies at $2,100, while critical support lies at $1,750. A break of this latter level could trigger a free fall to new yearly lows. Market sentiment is extremely bearish, with Bull Power at -892.24, an 11-day low. Additionally, there is a capital outflow of -$25.35 million and a drop in futures open interest to $20.76 billion, the lowest since March 23.

The Derivatives Market: A Warning Sign

The surge in options open interest to $3.44 billion, compared to $11 billion in December 2024, is a warning sign. This indicates an outflow of speculative capital and bearish expectations. Despite a slight upward bias in the Call/Put ratio (58.59%/41.41%), the total amount is insignificant. Furthermore, the correlation with Bitcoin, whose spot ETFs recorded weekly outflows of -$8.7 million, according to Coinglass data, adds downward pressure.

Likely Scenarios: What to Expect

Bearish Scenario (60% probability): If ETH breaks the $1,750 support with volume above 400,000 ETH, the target would be $1,600.
Neutral Scenario (35% probability): The price could consolidate in a range of $1,750-$2,100, awaiting further catalysts.
Bullish Scenario (5% probability): A rebound from $1,750, accompanied by an institutional inflow of over $50 million, could propel the price towards $2,100.

ETH Staking: A Lifeline?

The Ethereum staking market is showing signs of consolidation, with 34.38 million ETH staked (27.99% of the total supply). Although there has been a slight pullback from the 2024 highs, staking acts as structural support, reducing selling pressure. However, centralization on Lido (27.24% of the market) and the declining APR are risks to consider.

The prevailing trend is bearish as long as ETH trades below $2,100. Short-term traders could sell rallies towards $2,000-$2,100, while investors could accumulate near $1,750 with a stop at $1,700. Monitoring the staking ratio (34.38 million ETH) and stETH flows will be crucial.

Disclaimer: This content is not financial advice. Cryptocurrencies are volatile assets.