The Ethereum price has been among the worst hit in the flash crash that took place on Monday. The crash sent the asset’s price down below $2,200 for the first time in the last week and has continued to trend low around this point. As the market shows a bit of recovery momentum, questions remain about what could have triggered the crash.
Ethereum Price Fell Because Whales Have Been Selling
One of the most obvious causes of the flash crash that affected the Ethereum price is the fact that large holders have been selling. This month, ETH hit its highest level in the last year and this sent a lot of investors back into profit. Now, since there has not been a complete bullish turnover of the crypto market, there are expectations that the market could crash and investors are trying to secure profits before this happens.
Crypto analyst Ali Martinez flagged the selling from these large holders in a post on X (formerly Twitter) on Sunday. According to him, these large holders had actually begun selling when the price had first crossed $2,300. This means that the selling pressure had been mounting for a while before being reflected in the price.
The whales who hold more than 10,000 ETH in their balances had been reducing their holdings toward the end of November. By December, their holdings had fallen to their lowest point in the last three months, showing proof of massive sell-offs by these whales.
ETH price at $2,242 | Source: ETHUSD on Tradingview.com
Uncertainty About Macro Factors
Macroeconomic uncertainty has also played a role in the crypto crash that sent the Ethereum price to $2,200. One example of this is the CPI data release that is expected to take place on Tuesday. As investors eagerly await the results from the announcement, market fluctuations are expected.
The November inflation data is also expected to be released this week, as well as the Fed’s decision and statement happening on Monday. Ahead of these events, high volatility is always expected as investors move to secure some of their positions.
Nevertheless, Ethereum has begun to show some bullish momentum once more. It has since bounced from its lows of $2,170 and is back up above $2,000, where bulls are already providing a lot of support. If Bitcoin’s price continues to rise, Ethereum could reclaim the $2,300 level before the day is over.
The price of ETH is sitting at $2,238 at the time of this writing, down 4.50% in the last 24 hours.
Featured image from Quora, chart from Tradingview.com