Recently, the price of Ethereum (ETH) suffered a severe blow, experiencing a significant fall within two days, primarily due to the combined influence of multiple factors, leading to a deterioration in both market sentiment and technical indicators.

First, regulatory emergencies have triggered market turbulence. The U.S. Securities and Exchange Commission (SEC) announced an investigation into decentralized finance (DeFi) protocols, directly impacting the Ethereum smart contract ecosystem and causing panic selling among a large number of investors. On-chain data shows that large investors sold off 50,000 ETH in one go, causing the price to fall below the important support level of $4,560, triggering a chain reaction.

At the same time, some institutional investors are gradually reducing their holdings of ETH and increasing their positions in other competing coins, intensifying market selling pressure. On the technical side, the price of ETH was suppressed by bears before reaching the resistance level, and the Bollinger Bands indicator has fallen below the middle band and is approaching the lower band. The increase in trading volume indicates a spread of selling sentiment. The price level of $4560 has turned from support to resistance, and if the rebound fails, it may further drop to around $4200.

From a fundamental perspective, the usage rate of the Ethereum mainnet has declined, and the expansion of Layer 2 solutions has somewhat weakened the value of the main chain. ETH has entered an inflationary state again, and the decrease in the amount burned has led to increased supply pressure. Although some large holders are buying on dips, overall institutional funds tend to flow towards Bitcoin and other altcoins, causing ETH's market dominance to decline.

The macroeconomic environment has also impacted the cryptocurrency market. After the release of the U.S. Producer Price Index (PPI) data, the crypto market adjusted in sync with the U.S. stock market. On Friday, the closing operations of European and American traders, along with the uncertainty surrounding the upcoming speech by the SEC chairman, further intensified short-term market volatility.

The recent fall of ETH is the result of a combination of regulatory, technical, and liquidity factors, differing from a typical bull market correction. Although the long-term fundamentals have not completely deteriorated, it is still necessary to remain vigilant about the risk of further declines in the short term. Investors should wait for clear signs of stabilization on the daily chart before considering buying the dip.