Ethereum prices suffered a notable decline on Tuesday, October 7, dropping more than 6% as traders booked profits, sending the digital currency lower.
The world's second-most valuable cryptocurrency by market cap rose to more than $4,750.00 before falling to around $4,450.00, according to TradingView's Coinbase data. The digital asset suffered this decline after rising more than 20% during the steady uptrend experienced since September 25th.
This happened on a day when most of the top 10 cryptocurrencies by market capitalization were in the red, according to figures provided by CoinMarketCap.
Amid these developments, several market participants provided explanations for the reason for the decline in the Ether market price.
“Today's pullback in Ethereum and crypto markets primarily reflects profit-taking after nearly 10 days of strong gains across the board,” Tom Bruni, Head of Markets and Retail Investor Insights at StockTwits, said in an email.
Commenting on how this pattern has played out in stocks, he suggested, “We've seen similar weakness in stocks, with stocks making modest highs but struggling to maintain upward momentum over the past week.”
Tim Enneking, managing partner at Psalion, echoed this sentiment.
Asked whether profit-taking has spurred Ether's decline, he said in an emailed commentary: “Essentially yes. After an incredible rally almost across the board, all major digital assets have rallied a bit today.”
“We currently appear to be hitting a short-term bottom and expect to see more BTC ATH soon,” he added, offering a short-term outlook.
Brian Huang, co-founder of fintech company Glider, also commented on the matter, highlighting Bitcoin activity involving a single wallet worth billions of dollars.
“This afternoon we saw a major movement of $4 billion from a dormant Bitcoin wallet,” he said in an email.
This post from X (formerly Twitter) references the aforementioned move.
“Movement from dormant wallets is usually a sign of selling and profit-taking,” he noted.
“This week also coincides with new highs for BTC. It’s a good time to sell,” Huang continued. “BTC’s move had a ripple effect throughout the broader ecosystem, impacting ETH.”
Julio Moreno, Head of Research at CryptoQuant, focused his opinion on activity in the Ether futures market, a derivative contract that investors can use for speculation and hedging.
Asked whether Ether's recent decline was caused by profit taking, he said via Telegram: “Yes,” adding: “And this has to do with traders taking profits in the futures market.”
He provided the diagram below to help explain this activity.
“As you can see, open interest has fallen by $1.7 billion over the past 24 hours as prices have fallen, indicating profit-taking by traders holding long positions,” he said.
Retail trader hesitation
Bruni commented on the mindset of retail investors, explaining that they are reluctant to buy at current price levels.
“There is some hesitance to aggressively buy these new highs amid retail congestion and ahead of earnings season starting next week,” he said.
Bruni added: “While risks from the Fed, tariffs and other global tensions have been largely discounted by markets, earnings remain a wild card and are seen as a key risk for equities and risk assets heading into the fourth quarter.”
“That said, while the major indexes are moving sideways, there is still plenty of individual stock volatility to attract traders.”
Expected to trade within a range
Bruni also provided a short-term outlook for Ether.
“As for the crypto market, Ethereum remains in the 3,800-4,900 range for the time being, but the retail industry expects it to reach new all-time highs eventually,” the analyst said.
“For now, traders are buying dips toward the bottom of the range and selling peaks toward the top, awaiting an eventual price move above $5,000 that would signal the beginning of the next phase of this altcoin's bull run,” Bruni added.
