Ethereum’s Strength Fades as Market Decline Continues
Ethereum’s ether (ETH) showed strength over the weekend, surging as much as 7% to a Monday session high of $2,850, outperforming the rest of the crypto market. However, this momentum was short-lived, and the broader market decline pulled ETH back down, with the cryptocurrency ultimately ending the day 2% higher over the past 24 hours.
The market’s volatility was attributed to a muted trading session due to the U.S. holiday, with many traders returning to their desks on Monday to find a sharply lower market. Bitcoin (BTC) fell to $95,500 from just above $97,000, while the CoinDesk 20 Index dropped by around 2%.
Despite the decline, ETH managed to hold onto its 2% advance over the past 24 hours, while the CoinDesk 20 Index and BTC were about 2% lower.
Traders Point to Past Patterns
Many traders were quick to point out past occasions when a brief ETH rally preceded broader weakness in the crypto market. For example, in late January and early February, a 10% ETH rally to $3,400 in just three days ended in a capitulation event, with BTC dropping 13% and ETH tumbling 35% to nearly $2,000 over a low-volume weekend.
Memecoin Fiascos Weigh on Layer-1 Networks
Ethereum’s strength occurred as memecoin fiascos such as Argentina’s LIBRA on Solana and BNB Chain-based BROCCOLI, inspired by former Binance CEO CZ revealing his dog’s name, weighed on the tokens of rival layer-1 networks.
Analysts Weigh In
Aran Hawker, CEO of trading automation platform CoinPanel, noted, "ETH’s recent price action isn’t an outperformance – it’s more of a catch-up to where it should be. Some traders may have rotated back into ETH from SOL, but there’s no clear trend shift or structural change. Any perceived outperformance could be erased by the next major market move."
Joel Kruger, a market strategist for LMAX Group, was more optimistic, saying, "There is evidence of ETH potentially wanting to finally put in a major bottom against bitcoin after downtrending since 2021. We believe it will be important to keep a close eye on the current monthly high in the ETHBTC ratio, with a break back above to encourage the reversal outlook."
Open Interest Surges in ETH
Crypto traders’ interest in betting on ETH spiked on Monday relative to BTC, with CoinGlass data showing open interest for ETH futures rising 12% to 9.27 million contracts (worth nearly $2.6 billion) on all exchanges combined over the past 24 hours, led by offshore marketplaces Binance and Gate.io, while BTC futures open interest grew only 1%.
Conclusion
Ethereum’s brief strength over the weekend was ultimately overshadowed by the broader market decline, with many traders pointing to past patterns of a brief ETH rally preceding weakness in the crypto market. While some analysts see potential for ETH to put in a major bottom against bitcoin, others caution that any perceived outperformance could be erased by the next major market move.
FAQs
Q: What caused the brief surge in Ethereum’s price over the weekend?
A: A muted trading session due to the U.S. holiday may have contributed to the surge, as well as traders rotating back into ETH from other cryptocurrencies.
Q: Why did the broader market decline pull back the gains in Ethereum’s price?
A: The market’s volatility was attributed to a sharply lower market, with many traders returning to their desks on Monday to find a drop in prices.
Q: What is the outlook for Ethereum’s price in the near term?
A: Some analysts see potential for ETH to put in a major bottom against bitcoin, while others caution that any perceived outperformance could be erased by the next major market move.
