Ethereum's price dropped by more than 4% on May 15, falling to around $2,575. This decline aligns with a broader downturn across the cryptocurrency market, which saw a total market cap decrease of approximately 2.40% to $3.3 trillion.
Let's explore the key factors contributing to Ethereum's price drop and what it could mean for future market movements.
Key Factors Behind the ETH Price Decline
Several market and technical indicators point to reasons for the recent drop in Ethereum’s price. These include liquidations, reduced open interest, and signs of buyer exhaustion.
Long Position Liquidations and Declining Open Interest
Data from CoinGlass shows that Ethereum’s open interest (OI) decreased by 4.5% in the last 24 hours, reaching $31.52 billion. A drop in open interest often reflects fading trader confidence and reduced market liquidity, as investors exit their positions—contributing to downward price pressure.
The price retracement triggered significant liquidations, with long positions accounting for $64.6 million in forced closures. Short-position liquidations were notably lower at approximately $21 million.
This was part of a broader market deleveraging event, with total liquidations across all cryptocurrencies reaching $312 million.
Combined with reduced market participation—evidenced by a 32.5% drop in trading volume—the selling pressure intensified the bearish momentum. The long/short ratio stood at 0.9558, further indicating weakening bullish sentiment.
Buyer Exhaustion and Technical Resistance
Ethereum’s impressive rally over the past week pushed its Relative Strength Index (RSI) above 70 on multiple timeframes, signaling overbought conditions. According to CoinGlass’s RSI heatmap, ETH’s RSI measured 71 on the 12-hour chart and 73 on the daily chart.
In addition to overbought signals, Ethereum faced strong technical resistance between $2,600 and $2,800—a range that also coincides with the 200-day Simple Moving Average (SMA).
Prominent crypto analyst Michael van de Poppe noted that Ethereum must break above this resistance zone to sustain momentum and potentially reach new highs in 2025. He suggested that such a breakout could signal substantial upside potential for the broader altcoin market.
Van de Poppe also identified a short-term downside target between $2,100 and $2,230, which could offer a favorable entry point for late investors.
According to earlier Cointelegraph analysis, Ethereum’s market dominance recently reached its most overheated level since May 2021. Historically, such levels have often preceded significant market corrections.
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Frequently Asked Questions
What caused Ethereum’s price to drop?
Ethereum’s decline was driven by a combination of long-position liquidations, reduced open interest, and overbought technical conditions. Broader market sentiment and a decrease in trading volume also contributed.
What is the significance of RSI in cryptocurrency trading?
The Relative Strength Index (RSI) is a momentum indicator used to identify overbought or oversold conditions. An RSI above 70 typically suggests an asset may be overbought and due for a correction.
Where is Ethereum’s current resistance level?
ETH is facing strong resistance between $2,600 and $2,800, which also aligns with its 200-day Simple Moving Average. Breaking above this zone could indicate renewed bullish momentum.
Should I consider buying during a price dip?
While buying during dips can be a strategic entry point, it's essential to conduct personal research and consider market conditions. Some analysts see support near $2,100–$2,230.
How does open interest affect cryptocurrency prices?
Open interest reflects the total number of outstanding derivative contracts. A decline may indicate falling trader engagement and can often precede or accompany price decreases.
Can Ethereum still reach new highs in 2025?
Despite short-term volatility, some analysts believe Ethereum could achieve new highs if it breaks key resistance levels. Market cycles, adoption trends, and broader crypto momentum will play important roles.
This content is for informational purposes only and does not constitute investment advice. Readers are encouraged to conduct their own research before making any financial decisions.