Why is Ethereum (ETH) price down today?

Ether price registered a flash crash-style wick down to $2,080, its lowest value since January 2024, after bearish volatility from the weekend spilled over in the early hours of Feb. 3. Ethereum could possibly close its lowest daily candle since win on Nov. 6, 2024. In fact, the largest altcoin registered a failed bullish breakout on Jan. 31, before witnessing a flash drop of 40% between Jan. 31 highs and Feb. 3 lows. Ethereum OI declines 28% in 3 daysEthereum collectively suffered with other crypto assets after Trump’s initiation of a potential “trade war” pushed investors to adopt a risk-off sentiment. The newly elected president issued an executive order that imposed 25% tariffs on imports from Canada and Mexico and a 10% tariff on imports from China. This move set a ripple effect, with Canada responding with its own 25% tariffs on $155 million in US imports. Equities and cryptocurrencies immediately witnessed a sell-off, with significant liquidations causing a further cascade. Data suggest that $2.32 billion in crypto positions have been liquidated in the past 24 hours, with Ethereum leading the pack with $626 million. Ether open interest (OI) also took a significant hit, with a 28% drop in less than 3 days, dropping from $31.2 billion to $22.6 billion. This implied that futures traders had been aggressively taken out over the past few days, which could carry forward as traders might look to cut their positions on short-term bounceback. Meanwhile, 751,287 traders were liquidated, and one of the largest liquidations taking place on Binance involved an ETH/BTC trade worth $25.6 million.This particular liquidation event was one of the largest on record, with multiple commentators comparing the bloodbath to the Terra-Luna and FTX drawdowns. However, Ben Zhou, CEO of Bybit, revealed that the actual liquidation amount could be up to $10 billion, surpassing current data estimates. Related: Why is the crypto market down today?Ethereum jumps 30% from Monday's lowsAfter dropping down to $2,080 in the Asian trading session, ETH has recovered by almost 30% from its lows, currently valued at around $2,700. It is a sharp v-recovery from its flash wick below, but it is not a complete confirmation yet. A couple of factors are in play right now that need to be accounted for. Firstly, Ethereum has registered a new daily and weekly low, which has completely swung below a year’s price action. This implied a change in market structure, which traders will consider moving forward. Ether also lost the support of the 200-day moving average, which is usually not reclaimed easily after a sharp break below, which is the current case. Secondly, the liquidation event that transpired over the market will keep many sidelined in the short term until further clarity is attained from a macro standpoint and new geopolitical policies are imposed by the US. From a sentiment perspective, Ignas, a DeFi analyst, highlighted that ETH supporters were timid after the crash and added, “Ethereans are surprisingly quiet on this big ETH drop compared to SOL & BTC. No anger or blaming the EF. Is it capitulation? My concern is that it leads to apathy and no real change. If the community gives up, $ETH might end up like $ATOM.”The most likely short-term trend for Ethereum could be sideways consolidation under $3,000 as the market recovers from the latest bearish onslaught. Related: Crypto market liquidations likely reached $10B — Bybit CEOThis 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.