Ethereum drops further as Bitcoin’s decline, uncertainty over ETF weigh

• Ethereum price falls for a second consecutive day as bears ignite $91.91 million of liquidated positions.
• Past gains during the year’s second quarter can be a positive amid uncertainty in SEC's Ethereum ETF approval.
• Founder Vitalik Buterin explains key steps for "The Purge" on Ethereum.

Ethereum's (ETH) price reached a low of $3,362 on Tuesday after a decline in Bitcoin sent a large part of the crypto market into the red zone. ETH started the second quarter in the red, although historical data suggests that Q2 has been an averagely good month for the largest altcoin. Meanwhile, Vitalik Buterin's post explaining how The Purge could boost Ethereum's decentralization could also indicate long-term growth.

Read more: Ethereum consolidates above $3,500 as Bitwise CIO says ETF delay would be positive

Daily digest market movers: liquidations, historical Q2 gains, and The Purge

Ethereum's chances of seeing a significant price boost face uncertainty as the US Security and Exchange Commission (SEC) is yet to show any positive sign of approving applications for a spot Ethereum ETF. As a result, much of its price movements in the past months have largely been due to its high correlation with Bitcoin rather than its own fundamentals.

For example, in the past 24 hours, Bitcoin shed almost 6% of its value, triggering similar losses in Ethereum, which has seen more than a 6.7% decline. Losses in the two largest cryptocurrencies saw over $500.6 million liquidated from the entire crypto market in the past 24 hours, with the largest single liquidation order valued at $7.48 million. The total ETH liquidations sit at $91.91 million, with long positions accounting for $75.1 million.

However, historical records show Ethereum may still have a positive second quarter despite the downbeat start. A chart by crypto analyst @ali_charts on X shows Ethereum's Q2 results have always been positive except in 2022, when it recorded a 67.34% loss. According to the charts, ETH's Q2 historical performance has an average of 66.59% and a median of 15.29% in gains.

Ethereum returns in Q2 chart

Although, he also noted that the "high probability" of the SEC delaying approval for a spot Ethereum ETF can cause "turbulence in the market." On the contrary, a green light from the SEC would give Ethereum more institutional backing and exposure to a large number of retail traders, which may cause a rally in its price.

Ethereum co-founder Vitalik Buterin also provided insights that indicate long-term progress for the cryptocurrency and its underlying ecosystem. On Monday, he highlighted in a blog post that a lesser-known Ethereum improvement proposal (EIP), the EIP-6780, was introduced during the recent Ethereum Dencun upgrade. He mentioned that EIP-6780 is a huge part of what he terms "The Purge."

The Purge would help "slim down Ethereum and clear technical debt," said Buterin. In essence, it would shift workload from the main chain, reducing the computational and technical resources of running an Ethereum node while boosting decentralization and security in the process, Buterin said.

In other news, Vitalik Buterin reposted on Tuesday a former blog post he wrote squashing Layer 3s that serve the same purpose as L2s. He mentioned that L3s only make sense if they serve a different scaling purpose from an L2.

Also read: Vitalik Buterin announces next step in simplifying Ethereum protocol, ushers in the Purge

Technical Analysis: ETH could fall below $3,000

In an analysis on Monday, @ali_charts said in an X post that Ethereum could crash to $2,800 if it breached the $3,400 support level. As of the time of writing, Ethereum is trading at around $3,362.1. However, another X user noted a strong historical bidding at the $3,200-$3,000 area.

ETH/USDT 1-hour chart

This aligns with earlier predictions by FXStreet analyst Akash Girimath, who stated that Ethereum's price could sweep the range low at $3,054 if Bitcoin fails to recover after its short-term liquidity run.