Why is Ethereum (ETH) price down today?

Ether (ETH) price is down by 8% on March 19 and the recent price correction comes amid reduced activity on the Ethereum network. Since Ether’s price hit $4,000 for the first time since 2021 on March 8, the second-largest cryptocurrency by market capitalization has continued to drop lower.

Let’s investigate the reasons why Ether price is down today.

Futures liquidations send Ether price lower

Ether’s price decline has led to a rush of liquidations across the derivatives market. Bullish traders were caught off guard, leading to a quick spat of long liquidations.

In the past 24 hours, over $110.6 million in Ether long positions have been liquidated, with $77 million being wiped out in the previous 12 hours. The large amount of long liquidations has traders eying the $3,100 price level. If Ether’s price hits that level, $212 million of leveraged long positions are at risk for liquidation.

Ether price is negatively affected when long derivative positions are liquidated without buying pressure from trading volume.

Related: The DeFi bots pumping Solana’s stablecoin volume

Ethereum volume and TVL waiver

Ether price fell, coinciding with the plummeting of Ethereum network volume. Ethereum volume has fallen 6.15% for the week of March 19. The drop in network volume comes after the highly anticipated Decun upgrade on March 15.

Correlating with the volume drop-off, Ethereum network’s total value locked (TVL) dropped 8.5% in 24 hours on March 19. Current Ether TVL of $47.9 billion is over $60 billion less than the all-time high, which was set on Nov. 8, 2021.

The major decrease in volume comes as Solana (SOL) gains momentum amid the memecoin craze.

Related: The Fed’s BTFP program is officially over — Will Bitcoin price take another blow?

ETH traders’ confidence wanes

Market analysts are showing pessimistic perspectives in regard to Ether’s shorter and medium-term price performance. Market Prophit highlighted that both the crowd and smart money cohorts have bearish sentiments in regard to Ether price.

The downturn in sentiment comes as large capital groups are signaling that a spot Ether ETF is less likely to be approved. Despite this, Fidelity filed an amendment to their spot Ether ETF application on March 18.

Investors’ appetite for high-risk assets and their interest in DeFi could continue to diminish if macro events, the emergence of new blockchains and a reduction in volume hinder growth. The eventual increase in Ethereum network-based protocols and the potential of a spot Ether ETF may prove to be a long-term catalyst for price growth.

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.