The charts are starting to get ugly in the cryptocurrency sector once again.

Ethereum (ETH 4.57%) has been among the more dramatic movers intraday, with its 24-hour decline now amounting to 5.1% as of 4:00 p.m. ET. That move has been enough to push the world’s second-largest cryptocurrency back below the $3,000 level, and provide a year-to-date decline for investors, many of whom may not have seen this move coming.

Ethereum

Today’s Change

(-4.57%) $-141.04

Current Price

$2945.12

Let’s dive into three key reasons why Ethereum is plunging today.

What’s the rub?

Source: Getty Images.

Ethereum’s 24-hour move is more significant than that of the broader crypto market, which has declined a little more than 3% over the past day. That said, as I pointed out in a recent piece on Bitcoin (and I’d argue that many of the same macro factors impact both tokens), concerns about financial market stability and the health of the Yen carry trade appear to be affecting the largest and most liquid tokens in the market today.

Additional concerns I’ve seen outlined in various media reports suggest that Ethereum whales (large investors holding more than 100,000 tokens) have traditionally been adept at absorbing selling pressure in the past. However, concerns that these so-called whales may capitulate at some point and be forced to sell have some retail investors reconsidering how much risk to take on these market dips.

Finally, concerns around competing high-speed and low-cost layer-1 networks that provide smart contract functionality in a similar way to Ethereum (but in a more cost- and energy-efficient manner) have raised the stakes for Ethereum’s long-term viability. There’s a growing thesis that Ethereum’s status as the reigning default network for everything related to decentralized finance could come to an end at some point in the not-too-distant future.

I’m not so sure about that last one, but I will say that these downside catalysts which have taken Ethereum lower today are essential to consider. As long as marketwide fear persists among investors, Ethereum’s near-term price action may remain tilted toward the downside.