Ethereum has experienced a wild ride. The price has begun to decline after rising by almost 70% in just three months to $4,788. ETH is facing the heat from profit-taking, technical indicators, and some new discussions regarding its long-term role. However, record ETF inflows and robust on-chain activity suggest an otherwise bullish outlook.
Profit taking after a big rally.
The last three months saw Ethereum surging immensely, touching $4,788 a few days back. It went up 70% in just three months! As the prices neared the $4,800 mark, many traders booked their profits, which triggered almost $460M worth of liquidations across the market. The sell-off pressure was further fueled by short-term investors. This selling wave sparked more exits across the market. Technically speaking, ETH’s turnover ratio of 9.28% reflects high liquidity. This further allowed large transactions to execute without any slippage.
Yet, this is not it. Analysts are hoping for a bounce back and are seeing $3,931 as the key support.
Technical breakdown
Charts matter in crypto, and ETH hit a massive one. As soon as the prices dropped below the key support zone, stop-loss orders kicked in. Result – further selling. These technical levels are crucial. They are like invisible walls when it comes to prices. As soon as one of them breaks, the whole system tumbles, leading to a chain reaction of selling. 
Debates around tokenization.
This price action is also heating up the chatter around Ethereum’s role in tokenization. Ethereum creates and manages digital versions of RWA on the blockchain. Every time a transaction takes place on Ethereum, some part of ETH fees gets burned, reducing its supply.
Now this model is often criticized, mainly by Bitcoin supporters. As per them, this fee-burning model cannot be maintained in the long run. They argue that making ETH scarcer doesn’t guarantee lasting value. This, as per them, can cause economic imbalance.
Users supporting Ethereum have a different point of view. They state that burning fees makes ETH more valuable over time. In the future, this will strengthen its role as an important asset for the crypto space.
Irrespective of all the arguments, there is no decline in ETH’s fame. Money is pouring in as big institutions are bringing more and more liquidity into ETH investment funds and ETFs. This alone is sufficient to show the confidence everyone has in Ethereum’s future.
The bottom line
Ethereum’s dip is not random. It is an acute result of profit-taking after a great rally. People are reaping the patience they showed for the past three months. This, fueled by heated discussions around ETH’s future and technical flaws in the chart, further plunged the prices.
However, there is a catch. Beneath this short-lived volatility, ETH’s fundamentals are super strong. Investments are pouring in, and there are still a lot of daily transactions. The next major event everyone is eyeing is Fed Chair Powell’s Jackson Hole speech. Whatever comes out of it will determine if ETH will find its much-needed support or will plunge further down.
