The Ethereum price was not spared from a headwind that reached beyond the Crypto market on Tuesday. Crypto prices fell 3.3% in 24 hours, leaving the market cap at $2.27 trillion. The largest cryptocurrency, Bitcoin, plunged below $62,000, despite Nasdaq applying to the SEC for approval to offer BTC index options.
Ethereum Price Market Drivers: Strong Derivatives, Slowing Network Growth, Continued Decline in Ether ETFs
- Ethereum price traded at $2,571 during US business hours amid calls for an immediate reversal towards $3,000. Derivatives analysis shows strong fundamentals behind it ETH Pricestarting with Coinglass data on open interest.
- A subsequent uptick in futures volume to $26.46 billion lends credence to the bullish forecast, which remained unfazed by the rapid price drop. According to crypto analyst and trader Adam, the rise in OI and the fall in funding rate indicate short positioning and directional positioning. At the same time, the CVD divergence amid the downtrend signals an influx of market sell orders. Considering all these factors, Ethereum price could be gearing up for a robust short squeeze that would result in a sharp rise to $3,000.
ETH is preparing for one of the cleanest short squeeze trades I have seen in a long time.
So once that level is reached or we see some sort of strength/mean reversion, be sure to go long Solana or any other stock that is actually rising. pic.twitter.com/xX3Rhz4NAq
— Adam (@abetrade) 27 August 2024
- However, the number of new Ethereum users has dropped to 68.2k addresses, which is the level last reached in November 2023, according to SantimentThis is especially worrying considering that it will increase to around 197,000 new addresses in May 2024. A sustained decline in this metric means that demand for Ethereum is decreasing, thereby removing the momentum for ETH price to maintain an uptrend.
- Ethereum ETFs recorded another net outflow of $13.23 million on Monday. SoSoValue datathe products that allow investors to invest in ETH on exchanges have seen net outflows since August 15, indicating negative sentiment and lack of confidence in the market.
ETH Price Analysis: Can Bulls Emerge Victorious?
Ethereum price bulls seem to be fighting a losing battle in the short term considering the formation of a bear flag pattern on the daily range. On the upside, the asset could face resistance at the 20-day exponential moving average (EMA) at $2,700, the 50-day EMA at $2,890, and the 200-day EMA at $3,021.
The decline in the Relative Strength Index (RSI) in the neutral zone towards the oversold zone confirms the influence of sellers on Ethereum price. A 17% drop from the current market value is expected if the flag pattern is confirmed by ETH breaking the channel’s support. In this case, ETH could retest the early August support at $2,100.
Despite it, Ethereum Price Prediction suggests that the short-term support at $2,500 and the channel support could immediately negate the further corrective chances. An increase in short positions could also create a perfect squeeze and push the Ether price to $3,000 and higher.
Frequently Asked Questions (FAQs)
The decline in Ethereum price to the $2,500 support came in parallel with a general downturn in the crypto market.
Traders need to pay attention to the support levels at $2,500 and $2,100 as well as the resistance areas at $2,700 and $2,800.
It would be wise to buy more ETH if the price drops to $2,100 as dips could prove profitable.
Johannes Isige
John is a seasoned crypto expert known for his in-depth analysis and accurate price predictions in the digital asset market. As the price prediction editor for market content at CoinGape Media, he is dedicated to providing valuable insights into price trends and market forecasts. With his extensive experience in the crypto space, John has honed his skills in understanding on-chain data analysis, non-fungible tokens (NFTs), decentralized finance (DeFi), centralized finance (CeFi), and the dynamic metaverse landscape. Through his persistent reporting, John keeps his audience informed and equipped to navigate the ever-changing crypto market.
Disclaimer: The content presented may contain the personal opinion of the author and is subject to market conditions. Conduct market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.
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