Ethereum Falls Over 4% As Middle East War Tension Sparks Investor Caution

• Ethereum could face a sharp decline if the war tension in the Middle East persists.
• Ethereum ETFs are lagging because the ETH investment narrative isn’t easy for traditional investors to digest, BlackRock says.
• Ethereum has broken a key support level and could drop to $2,207 if bearish pressure persists.

Ethereum (ETH) is trading below the $2,595 support level on Tuesday as investors become more cautious following heightened war tensions in the Middle East.

Daily Market Reasons: Ethereum Falls on Middle East War Tensions

Ethereum and the entire crypto market are in a downtrend on Tuesday following geopolitical tensions in the Middle East. Ethereum fell below the psychological level of $3,500 on news that Iran launched a missile attack on Israel. The top altcoin could see a further decline if tension rises, as market participants anticipate a crackdown from Israel.

Ethereum exchange reserves are also aligning with the decline as investors quickly shifted from a risk-on attitude to a more cautious approach. According to CryptoQuant data, Ethereum exchange reserves have increased by over 144,000 ETH in the last 24 hours.

Ethereum exchange reserve

An increase in a cryptocurrency’s spot exchange reserve indicates more selling pressure and the potential for more price declines.

Meanwhile, Ethereum ETFs posted a net outflow of $0.8 million on Monday as BlackRock ETHA’s $11 million inflows failed to outpace Grayscale’s $11.8 million in ETHE outflows , according to data from investors Farside. On the other hand, Bitcoin ETFs saw a net inflow of $61.3 million.

Since launch, Ethereum ETFs have largely outperformed their Bitcoin counterparts, and a key executive at asset manager BlackRock expects the trend to continue.

According to a Fortune report, a BlackRock executive believes that ETH ETFs have not seen much volume because an Ethereum investment narrative is not easy for many traditional investors to digest. The executive noted that issuers must commit to raising awareness and educating customers about ETH’s potential and use cases.

Ethereum Breaks Key Support Level

Ethereum is trading around $2,480 on Tuesday, down nearly 4% on the day. Over the past 24 hours, ETH has sustained over $87 million in liquidations – the most since August – with long and short liquidations accounting for $71.01 million and $16.36 million, respectively.

Despite optimism surrounding a potential upbeat October for the crypto, Ethereum opened the month lower, breaking below support around $2,595. The move also saw ETH cross below its 50-day, 100-day and 200-day simple moving averages (SMA), indicating the potential for more bearish pressure.

ETH/USDT 4 Hour Chart

The next support level to watch is $2,395. A breach of this level could send ETH to $2,207.

The Relative Strength Index (RSI) and Stochastic Oscillator (Stoch) indicators are below their neutral levels and approaching their oversold regions.

A claim of the $2,595 support level will invalidate the bear thesis.