Why Ethereum Is Down 6.8% Today

Key Points

• The weekend liquidation event was triggered by last week's federal interest rate cuts, the first since December 2024.

• Despite Monday's drop, Ethereum is still up 88% over the past year and trading near all-time highs.

• Monday's price action will likely appear as a minor blip when viewed from next year, or even next week.

• 10 stocks we like better than Ethereum ›

The cryptocurrency Ethereum (CRYPTO: ETH) is down 6.4% in 24 hours as of this writing at 10:25 a.m. ET on Monday, Sept. 22. If weekends were normal market days -- as they are in the always-available crypto market -- Ethereum was down 6.8% from 4 p.m. ET on Sunday.

Ethereum's price drop was part of a broad slump across the crypto sector. Both volatile meme coins and robust leaders in the sector showed steep price drops on Monday. And this downtick comes from a surprisingly bullish event: Investors are taking profits on recent Ethereum gains.

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When leveraged positions meet federal rate cuts

Many traders faced the expiration of leveraged crypto positions over the weekend, resulting in a sweeping wave of liquidations. In Ethereum's case, these liquidations largely involved converting paper profits into cash payouts, because the cryptocurrency is trading near all-time highs these days.

In turn, the liquidation event was inspired by last week's announcement of lower federal interest rates, for the first time since December 2024. Monday's Ethereum retreat was significantly larger than Thursday's modest 2% jump, though.

Image source: Getty Images.

Ethereum as a long-term holding

The digital asset had plenty of freshly created value to unwind into cash liquidations today.

Prices are up 88% over the last year, including Monday's drop. Ethereum exchange-traded funds (ETFs) like the iShares Ethereum Trust (NASDAQ: ETHA) continue to see strong inflows of funds. When we look back at its current price moves from the perspective of next year, next month, or even next week, Monday's action will be an easy-to-miss bump in an extremely volatile chart.

And Ethereum continues to look like a strong long-term investment -- despite its unpredictable volatility and other flaws. I expect it to get back on track, along with the broader crypto market. It is one of those must-have cryptocurrencies that belong in every portfolio, as long as you believe that crypto is a valuable idea in the first place.

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Anders Bylund has positions in Ethereum. The Motley Fool has positions in and recommends Ethereum. The Motley Fool has a disclosure policy.