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Ethereum price hits key support as funding rate falls

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Ethereum price

Ethereum price continued its strong downward trend this week, reaching its lowest level since May last year.

Summary

  • Ethereum price dropped to a crucial support level as the crypto market crash accelerated.
  • Its liquidations jumped to the highest level in months.
  • Ethereum’s weighted funding rate dropped to its October lows.

Ethereum (ETH) token dropped to a low of $1,768, down by 60% from its all-time high. This retreat coincided with the broader crypto market crash as retail and some institutional investors dumped the coin.

Data compiled by SoSoValue shows that American investors have sold Ethereum ETFs worth $149 million this year. January is the fourth consecutive month that these funds have shed assets.

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Additional data show that Ethereum bulls were heavily liquidated as the crash continued. Ethereum positions worth nearly $2 billion were liquidated since January 31, the highest figure since Oct. 10 when positions worth over $3.8 billion were wiped out. 

Most importantly, the weighted funding rate turned negative and fell to its lowest level since Oct. 10. A negative funding rate indicates that investors anticipate the coin will decline. It happens when shorts are paying long positions in the perpetual futures market. 

On the positive side, Ethereum’s network is doing well, with Nansen data showing a surge in transactions, fees, and active addresses. Ethereum handled 70 million transactions in the last 30 days, while the number of active addresses rose by 42% to over 15 million. 

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It also holds a leading market share across sectors in the crypto industry, including stablecoins, decentralized finance, and real-world asset tokenization. These fundamentals may help fuel its long-term recovery.

Ethereum price technical analysis

Ethereum price
ETH price chart | Source: crypto.news

The weekly chart shows that ETH price has pulled back in the past few months. It has dropped from a record high of $4,950 to a low of $1,7686 today. Its lowest point was notable because it coincided with the ascending trendline connecting the lowest levels in June 2022 and April last year.

The price was also important because it was near the left shoulder of the inverted head-and-shoulders pattern. This pattern is one of the most common bullish reversal signs in technical analysis. 

Therefore, a weekly close above $2,130 will point to a reversal, potentially to $3,000. On the other hand, a close below the support at $1,768 will invalidate the bullish outlook.

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Crypto World

Oil Rose 3% to Open the Week: Here’s What Moved the Market on Monday

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Oil prices jumped more than 3% on Monday, pushing Brent crude above $116 a barrel. West Texas Intermediate (WTI), the US benchmark, climbed to roughly $102 per barrel.

The latest rise comes as the US-Israel war on Iran entered its fifth week with no signs of abating.

Oil Extends Its War-Fueled Rally 

Several escalatory developments over the weekend fueled the surge. President Donald Trump told the Financial Times he could possibly seize Kharg Island, the terminal that handles roughly 90% of Iran’s crude exports.

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The US president struck a mixed tone on diplomacy with Iran, saying he was “pretty sure” of making a deal with Iran but conceding that talks could still collapse.

Meanwhile, Iran’s parliament speaker warned that Tehran would “set them on fire” when American forces arrived and promised consequences for US-allied nations in the region. 

The oil price surge is far from over, according to market analysts, who warn that the prolonged closure of the Strait of Hormuz could drive crude even higher.

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“A scenario in which the Strait remains closed for an additional month would be consistent with oil prices rising towards $150/bbl and constraints on industrial consumers of energy supply,” Bruce Kasman, global head of economics at JPMorgan, said.

According to Bloomberg, US officials and Wall Street analysts have also begun discussing the possibility of crude reaching $200 per barrel.

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Asian Stocks Tumble, Crypto Feels the Pressure

The energy shock rippled across Asia. Google Finance data showed that Japan’s Nikkei 225 fell over 4.5%, while South Korea’s KOSPI dropped more than 4.3% as import-dependent economies repriced risk.

The volatility has spread to crypto markets, with asset prices dipping early in the morning before rebounding. 

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“The market briefly crashed just now — ETH dropped below $1,940 and BTC fell below $65,000,” Lookonchain reported.

Oil above $100 per barrel continues to pressure risk assets by fueling inflation expectations and delaying anticipated Federal Reserve rate cuts.

The post Oil Rose 3% to Open the Week: Here’s What Moved the Market on Monday appeared first on BeInCrypto.

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Lido DAO Mulls $20M LDO Buyback to Boost Token Price

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Lido DAO Mulls $20M LDO Buyback to Boost Token Price

Lido’s decentralized autonomous organization is considering a one-off $20 million buyback of its governance token to address so-called price dislocation, which is at “historically depressed levels” relative to Ether, according to the DAO. 

The proposal, submitted Friday, seeks permission to swap 10,000 Lido Staked Ether (stETH) tokens, currently worth $20 million from the DAO’s treasury for Lido DAO (LDO), arguing that LDO is undervalued.

“This is not a routine fluctuation. It represents one of the most significant dislocations between LDO’s market price and its underlying protocol fundamentals in the token’s history.”

A token buyback of this size could boost the price of the token, which has fallen roughly 96% from its all-time high. In November, a Lido DAO member pitched an automated buyback mechanism for LDO to improve the token’s price. However, that proposal hasn’t been implemented.

LDO’s change in price relative to ETH since 2024. Source: Lido DAO

Lido DAO pointed out that LDO is trading at a steep discount to Ether (ETH) at a ratio of 0.00016, roughly 63% below its two-year median.

This is despite the protocol holding the top spot of the Ethereum liquid staking market, with a 23.2% share of staked Ether, according to Dune Analytics data. The protocol’s dominance has even been flagged as a centralization risk to the network in previous years.

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Share of Ethereum network validators. Source: Dune Analytics

Related: Ethereum builders propose ‘economic zone’ to tackle L2 fragmentation 

LDO is currently trading at $0.30, down 95.9% from its $7.30 high set in August 2021, according to CoinGecko data. LDO’s $255 million market cap makes it the 141st largest token by value at the time of writing.

“That dislocation is not justified by a proportional deterioration in protocol performance,” Lido DAO said. 

Lido DAO proposes buying stETH in batches

Lido DAO proposed buying up to 10,000 stETH in smaller batches of 1,000 to buy LDO. 

Lido DAO said it would use limit orders or adopt a dollar-cost averaging strategy to avoid market volatility. 

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