According to Arcane Research, Ethereum has seen seven sharp drops of up to 50%. Additionally, this pattern can reveal a lot about the second largest cryptocurrency and the changing market landscape.

The collapse of more than 50% of the value of Ethereum

Ethereum surged on November 7, 2021, setting an ATH at $4,812. However, the market crash in December and January sent the price down 55% to $2,200. That means more than $280 billion has been wiped from the market.

Arcane Research has research Looking at ETH drops of more than 50% in the past, we found that a similar drop typically lasts around 38 days on average. However, the last drop took twice as long.

So what about the future? Arcane Research predicts that Ether could return to the $4,000 area as early as July 2022 barring crypto winter unfolding.

However, investors should also consider volatility and actions by big players like the Fed.

Strong declines from ATH | Source: Arcane Research

Measurement report of the indicators

CoinShares Digital Asset Fund Flows Report Jan. 28 shows that while the market saw slight inflows, Ethereum was in the red with outflows of around $26.8 million. The CoinsShares report calls this an “alarming” signal, saying:

“Ethereum continues to suffer from negative sentiment with $27 million outflows for the eighth consecutive week for a total of $272 million outflows.”

However, it also reassured investors by adding:

“The current situation is still much better than the outflow in February 2018 when up to 10% of AuM fled the market.”

Speaking of investors, we can see that Ether’s recent price drop has caused sentiment to drop below zero and into the -2.234 area. Market sentiment used to be very upbeat, even when Ether hit its lowest price in late January, so the gloomy sentiment seems to be a bad sign at the moment. However, negative thoughts can sometimes stimulate price increases, so experienced traders are likely to keep a closer eye on the market.

ETH price chart and market sentiment | Source: TradingView

Right now, the top altcoin is trading at $2,832 with a gain of more than 5% in the last 24 hours.

Source: TradingView

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