Ethereum slid 7% to $2,230 on Thursday and is trading near $2,245, and the selloff is best understood as collateral damage rather than a crypto-specific verdict. The trigger came from outside the asset class entirely: a violent unwind in artificial intelligence stocks that spilled straight through into digital assets. The scale of the move is worth registering. ETH's drop wiped out the entire gain that followed Wednesday's US midterm results and triggered $181.8 million in liquidations within 24 hours, with Coinglass data showing the bulk of it, $149.7 million, coming from long positions. That skew matters, because it tells you the decline was driven by forced selling from over-leveraged bulls rather than fresh conviction from shorts. The contagion was market-wide, with total crypto capitalization falling 5% and roughly $118 million in liquidations across the board. But the equity side was worse. The Nasdaq fell 5%, the S&P 500 dropped 4%, and the semiconductor index collapsed 10%, its worst session since the Covid crash in March 2020. AI-linked names led the carnage, and crypto simply followed. What's genuinely interesting is the on-chain detail. Exchange deposits were only marginally above 7,000 ETH, which is a strikingly small figure for a day of this magnitude. That points to either unusually thin spot activity or investors treating the dip as an entry point rather than an exit. Some of the muted deposit flow may also reflect caution lingering from last week's $630 million security breach. Meanwhile, US spot ETH ETFs recorded $5.3 million in inflows on Wednesday, the first positive session since October 23, which is hardly a ringing endorsement but does suggest institutional holders aren't rushing for the door. The overhang now is political. With Democrats having won control of both chambers, traders are weighing the prospect of tighter scrutiny of both crypto and AI, and that regulatory uncertainty is doing more to suppress risk appetite than any single data point. Until that clarity arrives, rallies are likely to be sold.
Technically, Ethereum at $2,245 sits beneath all four tracked moving averages, and the way those averages are positioned tells you something specific about the nature of this decline. Read each level individually. The H1 50-period SMA at $2,260 is the nearest obstacle, just $15 overhead, and it is the first gate any bounce must clear, close enough to be tested almost immediately, which makes it the level that will reveal whether buyers have any appetite at all. Above it, the H4 50-period SMA and the H1 200-period SMA both sit at $2,275, an exact convergence. When two timeframes land on an identical number, the market stops treating them as separate hurdles and defends the zone as one reinforced band, so $2,275 carries considerably more weight than its distance from price suggests. Behind that sits the H4 200-period SMA at $2,404, roughly $160 overhead, representing full structural repair rather than a corrective bounce. Note also the internal alignment: the H1 50-period average sits below the H1 200-period average, which is the shape of an established downtrend rather than a pause. Horizontal support and resistance, read independently of those shifting averages, mark the fixed zones where traders have actually left orders behind. On the downside, the first shelf is $2,200, a psychologically significant round number sitting just beneath price. Below it, $2,150 marks the next demand pocket, followed by $2,100, with $2,050 sitting deeper as a major structural area where buyers have historically appeared. On the upside, resistance begins at $2,260, aligning with the H1 50-period average, then the $2,275 convergence, followed by $2,320 and the round $2,400, with $2,404 beyond. Two paths are worth mapping. If Ethereum defends $2,200 and pushes through $2,260, a test of the $2,275 confluence becomes the immediate objective, and a daily close above it would be the first honest evidence the liquidation cascade has run its course, opening $2,320 and potentially $2,400. If $2,200 gives way under sustained selling, expect a slide toward $2,150 and then $2,100, which would leave every average firmly overhead. The bias stays bearish while price trades beneath the full stack, but the cushion is genuinely thin: $45 to first support against $15 to first resistance, so the near-term picture rests entirely on whether that $2,200 handle holds as ETF flows and regulatory headlines set the tone.
