Why Did Ethereum Drop? Crypto Crash Dents Ethereum Price Prediction for December

Core Insights - Ethereum's price has dropped over 7% in 24 hours due to a combination of structural and psychological pressures, despite unchanged fundamentals [1] - A significant sell-off was triggered by a Yearn Finance exploit, leading to a broader market decline, with Bitcoin down 5% and total crypto market capitalization falling below $3 trillion [1][3] Group 1: Market Dynamics - A dormant Ethereum ICO wallet from 2015 moved 40,000 ETH, valued at approximately $120 million today, causing market speculation but not resulting in actual liquidation events [2][3] - The Yearn Finance exploit led to aggressive unwinding of ETH futures, resulting in over $600 million in crypto liquidations [3][4] - Despite fears of a sell-off, no significant exchange deposits were detected, indicating that the transfer was likely an internal move rather than a liquidation event [3] Group 2: Trading Behavior - Increased open interest in ETH futures was observed before a sharp decline, with accusations of insider trading among retail investors, although no evidence supports these claims [4] - A notable trader, Machi Big Brother, faced significant losses due to high leverage, holding 3,300 ETH with a liquidation price of $2,831.58 [4][5] - Forced closures in trading positions resulted in a -108% return on equity for some traders, highlighting the risks of treating ETH as a speculative asset rather than collateral [5] Group 3: Market Conditions - Ethereum is currently in a fragile market position, with declining spot volume and unhealthy leverage levels persisting even after recent market corrections [6] - Global liquidity trends are downward, with tightening signals from Japan and elevated real yields in the US contributing to market volatility [6]