Key takeaways:
Ether’s price fell over 5% to $2,380 on May 19, mirroring similar downward moves across the wider cryptocurrency market.
Long liquidations accompanied ETH’s price drop.
Below $2,400 could be a buy-the-dip opportunity.
Ether (ETH) price declined by over 4.5% in the last 24 hours to around $2,380 on May 19.
Data from Cointelegraph Markets Pro and TradingView shows ETH lost as much as 10% of its value, dropping to an intraday low of $2,353 on May 19 from a high of $2,587 on May 18. Its daily trading volume has jumped by 110% over the last 24 hours to $30.4 billion, reinforcing the intensity of the sell-side activity.
Let’s look at the factors behind Ether’s losses today.
Ethereum leads crypto market sell-off
ETH’s drop mirrored similar downside moves elsewhere in the cryptocurrency market, with the total capitalization falling by approximately 1.40% to $3.25 trillion.
Bitcoin (BTC) saw modest losses, dropping 1% over the last 24 hours to trade above $102,900. Other major altcoins, such as XRP (XRP) and Solana (SOL), also recorded significant losses of 2.3% and 4.5% %, respectively.
This performance comes as the market digested the implications of Moody’s Ratings downgrading the United States’ credit score.
On May 17, the rating giant cut the US sovereign credit rating to Aa1 from Aaa, citing the country’s ballooning $36 trillion national debt, persistent fiscal deficit, rising interest expenses, and a lack of political will to rein in spending.
This downgrade, the first from Moody’s since 1919, has rattled financial markets, pushing Treasury yields higher and triggering “risk-off” sentiment.
“Yields are surging again following the Moody’s downgrade on Friday,” said capital markets commentator, The Kobeissi Letter, in a May 19 post on X, adding:
“Trade deals, recession worries, lower inflation, and slowing GDP all can’t get lower yields.”
Higher yields increase borrowing costs, hurting businesses and consumers, especially amid recession fears and fiscal concerns.
Meanwhile, the US Federal Reserve remains adamant about not cutting rates, with market participants pricing in only two possible rate cuts in 2025, according to the CME Group FedWatch Tool.
The downgrade signals higher economic uncertainty, prompting investors to withdraw from speculative assets, including crypto.
Long liquidations accelerate ETH downtrend
Ether’s tumble over the past 24 hours coincided with a wave of long liquidations that forced traders to exit their leveraged positions.
Over $255 million worth of ETH positions were wiped out in the last 24 hours, with long liquidations accounting for 78% of the total or $200 million.
The sharp price drop triggered a cascade of forced sell-offs as traders betting on Ethereum’s price increase were liquidated.
When leveraged long positions fail to maintain margin requirements, exchanges automatically sell their holdings to cover losses. Such liquidations accelerate price declines, exacerbating the downturn.
The broader crypto market also experienced a sharp deleveraging event, with total liquidations reaching $665 million across assets. More than $430 million leveraged positions were liquidated in the last 12 hours alone.
ETH price loses key support levels
On May 18, Ether’s price fell below the critical support levels provided by the 50-day simple moving average (SMA), currently at $2,530 and $2,400. Analysis had earlier opined that ETH bulls were required to hold above $2,400 to secure the upside.
ETH bulls are now focused on the next area of interest between $2,330 and the $2,274 range low reached on May 9. Losing this support would mean the ETH/USD pair could possibly retrace deeper toward the $2,250 zone, which is also the 100-day SMA.
The RSI dropped to 38 on May 19 from overbought conditions at 86 on May 9, indicating increasing bearish momentum as profit-taking intensifies.
Popular crypto analyst Michael van de Poppe said Ether’s price below $2,400 was a “steal,” providing a buy-the-dip opportunity before ETH resumes its rally toward all-time highs.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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