$?
$ETH
ETH
2,538.71
-2.29%
The Ethereum (ETH) price surge of 40% peaked over the weekend, with the first signs of declining buying pressure raising concerns about an anticipated price correction.
Last week, the price of Ethereum (ETH) recorded its strongest performance since December 2020, although the slowdown in momentum at the $2,500 level raised a wave of questions about the sustainability of positive ETH price forecasts. This increase came after a trade agreement was signed between the U.S. and China, and the launch of the Ethereum blockchain's 'Pectra' shard, which helped remove the factors that hindered the progress of the leading altcoin.
This surge ended a relative stability period that lasted for a month within a range of $1,450-$1,900. After surpassing this range, Ethereum had strong fundamentals to be considered 'the best cryptocurrency to buy.'
Why is this upward wave different from other currencies?
Unlike many other upward waves in the crypto market driven by speculation and the use of high leverage, the recent movement of ETH's price is primarily based on real demand in the spot market. Over the past week, Ethereum's estimated leverage ratio (ELR) recorded a significant decrease from 0.76 to 0.69 according to data from CryptoQuant, indicating that derivatives traders are adopting a more moderate approach to leverage usage.
Decline in estimated leverage ratio (ELR) for Ethereum – source: CryptoQuant. This decline coincides with massive withdrawals of Ethereum from trading platforms, with nearly 323,700 ETH withdrawn in just the last four days and an increase in staking by more than 180,000 ETH over the previous week alone.
These indicators clearly reflect investors' shift towards long-term holding strategies instead of engaging in short-term speculative activities.
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Technical analysis of Ethereum's price: Will the upward trend continue?
The current price slowdown coincides with bearish technical indicators, as the Relative Strength Index (RSI) on the daily chart has surpassed the overbought area at 80, a clear sign of buyer exhaustion. As is known, any rise must be followed by a subsequent decline, and it seems that a slight price correction is the logical next step to rebalance the market.
It is worth noting that the symmetrical triangle pattern – which has formed since 2021 – has resurfaced after a temporary break, with this recovery drawing strength from positive momentum indicators.
The weekly chart for the ETH/USDT pair shows a symmetrical triangle pattern – source: TradingView/Binance. The Relative Strength Index (RSI) has also surpassed the bullish zone above the signal line after a period of fluctuations within the 40 range, indicating an early signal of buyer strength rather than seller pressure. More importantly, the MACD indicator has turned towards a bullish trend for the first time since the surge following the inauguration of the U.S. president, having crossed above the signal line, forming a bullish golden cross, a technical signal that reinforces the hypothesis of a long-term upward trend within this large time frame.
Moreover, the 200-week simple moving average (SMA) has returned to represent strong technical support and may form a bottom for price correction, giving additional momentum to the possibility of a long-term upward trend. If buying pressure returns, Ethereum's price may aim to break through the previous triangle pattern to target the resistance level of $2,970, representing a 17% increase.
If the upward momentum continues, the movement may extend to test the upper resistance level at $3,750, an increase of nearly 50%. The 'Pectra' update, along with improvements in macroeconomic indicators, supports a cautiously optimistic outlook for Ethereum's price performance in the long term.
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