Disclosure: This article is not financial or investment advice.
Ethereum (ETH), the native token of Ethereum, is on track to post its first October loss since 2018, having fallen 5.40% since the start of the month to $2,475 on October 27.
The decline is due to intensifying competition from newer smart contract platforms like Solana (SOL) and a tepid market response to Ethereum-based spot ETFs.
However, there are growing signs that Ether may be poised for a turnaround, with several indicators pointing to a potential recovery towards $6,000.
Ether holds support from previous 160% gains
Ether is currently holding above a crucial support level at around $2,400. This price coincides with the lower trendline of ETH’s multi-month ascending channel pattern, which has historically preceded sharp price rallies, including the cryptocurrency’s 160% or more rally between October 2023 and March 2024.
If the support at $2,400 remains intact, Ethereum could target the upper boundary of the channel in the coming months, which is near the $6,000 mark.
In addition to the bullish outlook, Ethereum’s weekly Relative Strength Index (RSI) has also bounced off a historical support area, which is in line with Ethereum testing the lower trend line of the channel.
Ethereum price action has rebounded from similar support levels in the past, resulting in sharp upward moves.
$1.3 Billion in Ethereum Leaves Coinbase
The recent surge in Ethereum outflows from Coinbase points to a potential wave of institutional interest, according to data shared by CryptoQuant analyst Burak Kesmeci.
On October 25, in just one hour, an unknown party withdrew 543,000 Ethereum — worth over $1.3 billion — from the cryptocurrency exchange, marking one of the largest Ethereum moves in the past three months.
Such large-scale transfers are often seen as signals of institutional activity. When major players move large amounts of cryptocurrency off exchanges, it typically signals a shift toward longer-term holding strategies, which can herald bullish sentiment.
Kesmeci noted that massive outflows of Ether could be a precursor to a price rally, citing another transaction from August 2024 where 681,100 ETH worth $1.8 billion left the Coinbase exchange.
As this is the second such outflow in three months, it strongly suggests that institutional interest may be growing.
Ethereum Looks for Major Reversals Against Its Main Rivals
Ethereum’s potential rally to $6,000 could receive an additional boost from rotations from its main competitors, namely Bitcoin (BTC) and Solana.
From a technical perspective, Ethereum is now trading around historical uptrend line support against Bitcoin, which, coupled with an oversold RSI, could enable a sharp price recovery in the coming months.
Analyst Crypto Avails also asserts that the previous ETH/BTC rally from the mentioned trend line support coincided with the start of the “alt season,” the phase in which altcoins outperform Bitcoin.
“ETH vs BTC boost is sending altcoins higher,” noted user X, adding that altcoins are currently very cheap and will soon forget these levels.
Ethereum vs Solana Indicates More Capital Turnover
Ethereum’s next competitor, Solana, has surged by around 900% in value in the SOL/ETH trading pair as of June 2023. As of October 27, SOL/ETH hit a new all-time high of 0.0710 ETH.
However, the pair’s weekly RSI has jumped above 70, suggesting that it is overvalued. In other words, Solana may have risen too quickly against Ethereum and could face downward pressure.
The bearish divergence in SOL/ETH, coupled with declining RSI and volumes, indicates weak buying pressure and a potential price correction. Historically, overbought conditions have led SOL/ETH to fall towards its 50-week EMA, indicating a potential 35% decline.
The convergence of these capital cycles creates a favorable environment for Ethereum to push towards the $6,000 target by the end of the year in early 2025.
This article does not contain investment advice or recommendations. Every investment and trading move involves risks, and readers should conduct their own research when making a decision.
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