Ethereum has been experiencing a significant downturn, characterized by a sharp drop in price after retracing to the lower boundary of a broken wedge pattern. This decline is further exacerbated by the formation of a death cross, where the 100-day moving average crosses below the 200-day moving average. These technical indicators point to a bearish sentiment in the market, with low inflows into spot ETH ETFs signaling reduced investor interest.
Critical Support Zone
Despite the ongoing bearish trend, Ethereum is approaching a critical support level at around $2.1K, along with the 0.786 Fibonacci retracement level at $2,067. This area is expected to attract significant demand, potentially leading to a short-term sideways consolidation in the market. The recent rejection at the lower boundary of the wedge pattern and the failure to break above key Fibonacci levels demonstrate the strength of sellers in the market. However, the upcoming days will be crucial in determining whether Ethereum can hold the $2.1K support or if a deeper correction is imminent.
Ethereum’s value is closely tied to the engagement of its users and the activity on its decentralized network. One key metric used to gauge this engagement is the number of unique active addresses on the Ethereum network. This metric provides valuable insights into Ethereum’s market demand and overall valuation. The 14-day moving average of Ethereum Active Addresses shows a decline since late March 2024, signaling reduced user activity and transaction volumes. This downward trend reflects a bearish market sentiment, highlighting the need for a reversal to signal a potential long-term sustainable rally.
On the 4-hour chart, Ethereum was rejected from the resistance zone between the 0.5 ($2.6K) and 0.618 ($2.7K) Fibonacci levels, leading to continued bearish momentum towards the $2.1K support level. If demand re-emerges at this critical level, Ethereum may experience a temporary consolidation phase, pausing the downward pressure. However, a breach of the $2.1K support could trigger a long-liquidation event, potentially pushing the price lower towards the $1.8K region. The market will closely watch how Ethereum reacts in the coming days to determine its next move.
Ethereum is currently facing a bearish trend, with key technical indicators and market dynamics pointing towards a continued downward trajectory. The critical support level at $2.1K will play a crucial role in determining Ethereum’s short-term price action. Additionally, user engagement on the network remains a key factor to watch, as a reversal in the declining trend of active addresses could signal a shift in market sentiment towards a more bullish outlook. Investors and traders alike will need to closely monitor these factors to make informed decisions in the ever-evolving cryptocurrency market.
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