Ethereum can fall from $200 to $400 if the crypto market enters a new bear cycle, according to Quit, vice president of blockchain at Yugalab.
In a March 11 post on X, his quitting resignation questioned Ethereum (ETH)'s optimistic price target. While many consider $1,500 a possible floor for ETH, they warned that if the recession is just beginning, the historic trend suggests that a drawdown of 80-90% could push prices up to $200-400.
He also pointed out that Ethereum's 30% weekly decline and 50% weekly decline over the past three months doesn't necessarily mean the worst as true bare markets can erase much more value.
Despite this outlook, Quit remains bullish personally, but I advise you to rethink your allocation if investors are not prepared for further downsides.
Meanwhile, Ethereum whales are already positioned for potential price drops. On March 11, Lookonchain flagged a significant transaction in which Ethereum Foundation-linked wallets recently deposited 30,098 ETH (~56.08 million) with Makerdao (MKR) to lower the liquidation price. The wallet currently holds 100,394 ETH ($182 million) with the manufacturer, with a liquidation threshold of $1,127.
In another transaction, the Ethereum ICO whales also moved 7,000 ETH (~$12.94 million) to Kraken, indicating possible sales pressure.
Ethereum struggles for several reasons, including declining network activity, lower institutional demand, and widening competition from cheaper and faster blockchains. According to data from Sosovalue, funds traded by Spot Ethereum Exchange have witnessed net flow rates of around $119 million over the past week alone.
Some analysts point out that Spot ETH ETF appears less attractive than a steady yield of 4.5% on distributed financial finances because of the lack of staking incentives.
At the same time, Ethereum's domination in Defi and persistent futures trading is under threat as it has earned a total of gross due to its fragmented layer 2 ecosystem and its growing competition with platforms such as Hype and Berachain (Bera).
As a result of lower network activity and lower gas prices, ETH is also unable to maintain DEFL status, with supply currently increasing at an annual rate of 0.7%. Although it was intended to reduce inflation, the burn mechanism of EIP-1559 has struggled to offset fresh issuance.
It is unclear whether ETH will be able to quickly recover its previous $2,600 support if ETH does not have an increase in ETF staking incentives and debt demand. As of press time, Ethereum is trading for around $1,850, and has a liquidation of $246 million over the past 24 hours, according to Coinglass data.
