Broad market weakness is once again bleeding into valuations in the cryptocurrency sector. The world’s second-largest token is also on the decline today, with Ethereum (ETH 4.47%) slumping 4.7% over the past 24 hours, as of 2:45 p.m. ET. This move has brought Ethereum back toward the $2,800 range, after briefly spiking above $3,000 again this morning.

Ethereum

Today’s Change

(-4.47%) $-131.88

Current Price

$2821.38

With so much attention now centered on whether Ethereum can maintain momentum above the $3,000 level, today’s price action highlights some broader structural weakness in the crypto sector worth noting.

Let’s dive into exactly what’s moving the needle for Ethereum right now, given its otherwise bullish backdrop.

What gives?

Source: Getty Images.

Ethereum’s decline today comes amid some strong catalysts that investors might think would lead to price appreciation in any other period. I’ve touched on some of these upside catalysts recently, including a tokenized money market fund launched by JPMorgan on this network (https://www.theblock.co/post/382504/jpmorgan-launches-tokenized-money market-fund-ethereum) and BitMine’s Tom Lee reiterating his bullish narrative around the future of this layer-1 network as a long-term buying opportunity at current levels.

However, weakening risk sentiment around Ethereum and other top cryptocurrencies today has led to sharp swings in both directions. This has resulted in liquidation activity picking up for both long and short positions, with more than $162 million of Ethereum perpetual futures derivatives contracts liquidated over the past day ($130 million of which was on the long side).

This indicates to investors that any significant near-term price swing in Ethereum could be exacerbated, as more and more on-chain trading activity for top tokens shifts to the derivatives market.

Overarching broader market weakness, tied to a weaker-than-expected jobs report for the past two months released yesterday, appears to be the straw that broke the back of market sentiment. I’d reckon we could see continued highly volatile swings moving forward based on new economic data releases as they come-that’s been the standard thus far this year.