Ether (ETH) price faced a substantial 14% correction on Jan. 3, as the price dropped from $2,380 to $2,050 in less than 2 hours. This price level had not been seen since Dec. 1, 2023 and the unexpected swing led to the liquidation of $100 million worth of ETH long future contracts, which were leveraged bets on the price increase.
Traders are now questioning the significance of this price correction and whether it signals the end of the bullish momentum following three unsuccessful attempts to break above $2,400 in the past month. Coincidentally, this was also the third time that Ether’s price dropped below $2,150 during the same period, making it hard to argue that the bullish momentum is over.
Ether (ETH) price index, 12-hour, USD. Source: TradingView
The first noteworthy observation from the price chart is the swift recovery to $2,230 on Jan. 3, suggesting that whatever triggered the panic selling and derivatives liquidations has weakened. Some argue that the trigger was a market analysis released on Jan. 3 pointing to the denial of the spot Bitcoin ETF, published by Matrixport. Notably, the digital assets platform Matrixport was co-founded by Jihan Wu, who is known for his highly successful venture in the ASIC miner business at Bitmain.
More importantly, investors are factoring in the latest comments from Eric Balchunas, a senior ETF analyst at Bloomberg. Balchunas stated in an interview with Cointelegraph that approval odds remain at 90%. However, he reiterated that it might take longer for the final decision from the U.S. Securities and Exchange Commission to be reached. In essence, the markets have reacted excessively in both directions: showing excessive confidence in the Jan. 10 deadline and failing to differentiate Matrixport analysts’ opinions from actual news and events.
Attorney and commercial litigator Joe Carlasare perfectly encapsulated the situation in a social network post.
I know people are desperate for a narrative, but Bitcoin didn’t sell off because of some silly report about ETF denial.
It sold off because nothing goes straight up and it’s an easy grab for liquidity to do a long squeeze….
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