The current global market correction has seen major cryptocurrencies, such as BTC and ADA witness price fluctuations. Ethereum was reported falling briefly, trading below its lower strong support level of $4k. Interestingly, the second largest cryptocurrency recovered back above $4k within the shortest possible time. 

Despite the impressive recovery rate, market analysts are of the opinion that Ethereum might not hold on to its strong support for long, owing to the nature of the cryptocurrency market and the pandemic. The resurgence in cases of Covid has cast fears over the cryptocurrency market, leaving traders doubtful of a possible bull run. 

Liquidation Rate Hits $60M

According to multiple data from exchanges, liquidation volume for ETH reached $60M over the last few hours, suggesting an overleveraged market. The same data reveal that leveraged orders for ETH gathered around the $4k support level. 

Before now, Ethereum was testing the support level of $4k on numerous occasions, but failed to pass through it. As of the time of this publication, the second largest crypto is trading slightly above the $4k level with a 10% loss of its value. 

Earlier today, a Bloomberg analyst used technical analysis to determine the next support for Ethereum. The analyst confirmed that Ethereum’s base support is the $4k mark while the high support is $5k, adding that the recent leveraged longs are at war with selling pressure emanating from higher levels and are being liquidated. 

The analyst said that a majority of cryptocurrencies are consolidating within a price range, citing BTC and altcoins as an example. BTC has been consolidating within the range of $55k – $58, until it plunged to a low of $54k. The flagship crypto has since recovered over $700 at press time. 

Experts Predicts Bearish Market Run 

The past couple of weeks have been tough for the crypto market, with many coins falling rapidly. Bloomberg Galaxy Crypto Index reports that BTC, ETH, and other major virtual currencies have lost nearly a combined 14% in the last one month. 

Smaller altcoins weren’t spared too. Meme coins SHIB and Floki lost about 60%, while Avalanche reportedly shed 13% of its value. 

Many analysts have outlined the additional regulatory risks and the market being overleveraged as possible reasons for this phase. Many opened that the market was overbought, which reflected massively in the funding rates and long/short ratio. 

Experts are predicting the market to be bearish in the next few days, given the reported cases of the Delta variant of Covid-19. The fear and greed index reveals that crypto traders are afraid of going long or short because of the increasing cases of the Covid. 

Many countries will implement some high-level restrictions to curb the spread, and that includes taking some decisions that will affect the market. Already, the stock market is feeling the effect of the Covid news, with share prices falling. Since the crypto market shows a similar correlation to the stock market, it’s expected that the same will happen in the next few days.