ETH Stalls as TRUMP Token Rally Drives BTC to $105K: Why?

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Over a two-day period ending on Sunday, Ethereum‘s price dropped by 8% to reach $3,130, even though optimism was high in the cryptocurrency sector, with many expecting positive movements ahead of Donald Trump’s inauguration. Meanwhile, Bitcoin and Solana were setting new records, but the momentum in the Ethereum market has noticeably slowed down compared to them.

Ethereum (ETH) decouples from Trump-fuelled Crypto rally as losses near double-digits

The current state of Ethereum (ETH) appears less optimistic due to heightened volatility in the global cryptocurrency market, fueled by recent actions taken by U.S. President Donald Trump. On January 18th, Trump unveiled plans for a memecoin called $TRUMP token, which operates on the Solana network.

As an analyst, I’ve noticed an intriguing contrast between the TRUMP token’s impressive trajectory and the broader narrative surrounding the President’s World Liberty Financial (WLFI) initiative. While the WLFI project garnered significant public attention due to its controversial nature, it ultimately struggled to gather momentum and faced heavy criticism, eventually failing to take off. In stark contrast, the TRUMP token has thrived, demonstrating a remarkable success story.

On Sunday, January 19, the total value of all TRUMP tokens in circulation reached over $7.4 billion, and the number of these tokens traded during this time skyrocketed to approximately $14.8 billion.

The quick rise of this meme-based cryptocurrency has caused a stir in the crypto market, outperforming the total 24-hour trading volumes of both Shiba Inu (SHIB) and Dogecoin (DOGE). As a result, it became the most actively traded meme-currency within just its first 24 hours on the market.

Remarkably, the surge in value for the $TRUMP token seems to have occurred around the same time as a surprising drop in Ethereum’s price trend.

The cost of Ethereum (ETH) has fallen approximately 8% since the introduction of the memecoin, going from $3,494 on Saturday to a current weekly low of $3,130, as shown in the chart provided by TradingView.

The significant drop in value has sparked worry within the Ethereum community and among those who speculate in the market, as they ponder the potential wider effects of President Trump’s cryptocurrency policies on Ethereum’s position in the market.

Ethereum Foundation’s Persistent Sell-offs dampening ETH momentum

Donald Trump’s decision to use Solana as the foundation for his memecoin has given it an edge over Ethereum in the competition between Layer-1 smart contract networks. In just one day after Trump’s token launch, Solana’s price soared to a brand new record high of $275, while Ethereum suffered a significant drop of 8%.

It appears that a significant number of Ethereum investors may have switched their investments to Solana, Bitcoin, and other potentially profitable tokens instead, due to the belief that they might yield quicker returns prior to Donald Trump’s inauguration.

One significant element that’s currently affecting Ethereum’s immediate earnings potential is continuous selling by the Ethereum Foundation, who are the primary developers managing the network’s operations.

According to the diagram provided, it’s clear that the Ethereum Foundation has offloaded more than 400 Ether in various batches since January 7th. At this moment, their Ethereum holdings are less than 270,000 Ether.

In simpler terms, when important figures within a company (insiders) persistently sell their Ethereum (ETH), as has been seen recently, it weakens the overall optimism about its price increase. This action can deter new investors from investing and may cause current short-term holders to transfer their ETH to assets that are performing better in the market.

To put it simply, the surge in Solana’s popularity following Trump’s token release and the Ethereum Foundation’s recent selling activities seem to have played a significant role in causing Ethereum’s price drop during the last 24 hours.

Ethereum Price Forecast: $3,100 Support at Risk

The Ethereum price prediction graph indicates a period of stabilization, where it dropped down to around $3,130 in a single day but then rose by 1.8%, regaining the $3,300 level.

The current fluctuations in prices could be linked to a surge in market activity before Donald Trump’s inauguration, implying an increase in speculative trading.

Nevertheless, the price of Ethereum encounters significant hurdles around $3,529.98, as suggested by the Parabolic Stop and Reverse (represented by blue dots). This suggests that the current trend continues to lean bearish if it stays below this level.

In simpler terms, the blue lines on the chart, known as Donchian Channels, suggest that $2,920 is a strong foundation for the price. If the price drops below this point, it might indicate an extended fall towards $2,800, signaling a possible prolonged downtrend.

Instead, let’s flip it around: The center point of the Donchian Channels, currently at $3,332.42, has become a crucial level for potential bullish movements. However, the volume data indicates less bullish excitement than was observed earlier in the year.

The decrease in Bull-Bear Power (BBP) readings indicates a buildup of bearish influence. However, if bulls manage to break through the resistance at $3,529.98, Ethereum might attempt to exceed the $3,744.83 ceiling, suggesting a potential shift in market sentiment towards optimism.

In simple terms, the outlook for Ethereum is generally cautious unless it manages to surpass significant resistance points. If it can’t sustain its position around $3,100 as a support level, it could potentially face more significant drops in value.

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2025-01-19 17:42