The cryptocurrency market is facing a severe bearish correction to start 2026, with leading assets like Ethereum (ETH) recording massive losses. Over the weekend, ETH's price dipped by approximately 10%, briefly falling below the $2,200 level. This decline is part of a broader market downturn that saw Bitcoin (BTC) and Ripple (XRP) lose over 11% and 13% respectively in the prior week.
Ethereum has been the worst performer among the top 10 cryptocurrencies, trading around $2,240 at press time after a 25% decline over five consecutive days. The sell-off triggered over $750 million in leveraged position liquidations across the market in 24 hours, with long traders bearing the brunt of nearly $584 million in losses. Analysts attribute the sharp move to thin market liquidity, where order book dynamics allowed trades to have an outsized impact on prices.
Technical analysis paints an extremely bearish picture for ETH. The ETH/USD pair is trading below the downward-sloping 50-day Exponential Moving Average (EMA), with the Relative Strength Index (RSI) hitting a deeply oversold level of 20. The Moving Average Convergence Divergence (MACD) histogram is widening below zero, indicating strong bearish momentum. The critical support zone is now between $2,111 and $2,227, a level dating back to June 22. A daily close below $2,111 could open the door for a further decline toward the $2,000 psychological level.
Despite the pressure, on-chain metrics show underlying network resilience. Daily transactions remain between 2.2–2.5 million, active addresses are near 950,000–1.17 million, and Total Value Locked (TVL) in DeFi holds steady around $58–$61 billion. Stablecoin activity is strong, and staking continues at record levels. However, institutional behavior adds pressure, with recent ETH ETF outflows indicating large players are reducing exposure amid the volatility.
The market may find some stabilization from external factors, such as a recent manufacturing survey in China showing slight expansion, though analysts view this more as a background stabilizer than a direct catalyst. For a bullish reversal, ETH would need to reclaim resistance levels at $2,350 and then $2,420 to shift momentum.
