Ethereum continues to struggle below $3,100 amid weak market sentiment. The price has experienced a breakdown from a recent distribution level, characterized by ongoing lower highs and lows. Even with short-term indicators suggesting an oversold condition, buyer activity remains tepid and open interest points to a dwindling derivatives market with little new leverage.
Technical Analysis
Daily Timeframe
ETH has settled just above the crucial $3,000 support after descending from the significant $3,500 resistance level. Currently, it stands below both the 100-day and 200-day moving averages, confirming a bearish outlook.
Momentum appears subdued, with the RSI at 32, bordering on oversold conditions. Should buyers fail to maintain current support, a decline to $2,600 looms, followed by the major low of $2,100. Reclaiming $3,500 would signal a turnaround, but that requires substantial trading volume.
Daily Chart
4-Hour Timeframe
On the 4-hour chart, ETH is currently in a falling wedge pattern, typically a precursor to a reversal, though a breakout has not yet materialized. The price is testing the lower trendline of this wedge while trying to remain above $3,000.
A slight bullish divergence is visible on the RSI, possibly indicating a short-term relief rally. Nonetheless, any moves below $3,200 must come with significant volume to avoid a false breakout. Overall, the prevailing trend of lower highs and lows suggests bearish dominance unless the situation changes.
4-Hour Chart
On-Chain Analysis
Open Interest
Open interest in Ethereum has significantly decreased since early November, reflecting a drop in leverage within the market. It has fallen from over $30 billion to approximately $18 billion, coinciding with the recent decline in prices.
This significant decrease indicates that traders are either closing their positions or facing liquidations, typically preceding a spike in market volatility—either a bounce back or further sell-off. Until a consistent rise in open interest accompanies upward price movement, momentum is likely to remain restrained.
Open Interest
Disclaimer: The information provided is for educational purposes and does not represent financial advice. Please conduct your research before making investment decisions.
