Analysis of Ethereum's Price Movement: Risk of Falling Below $3,000
This article examines the recent fluctuations in Ethereum's price and its implications for traders and investors.
Ethereum has seen a slight recovery following a significant decrease that pushed its price below $4,000. Market participants are currently cautious as they reevaluate their positions amid recent volatility, which could signal a shift away from the bullish market trend.
Technical Analysis
Daily Chart
On the daily chart, ETH recently dipped below the central line of its ascending channel and the 100-day moving average, touching the 0.5 Fibonacci retracement zone around $3,400-$3,500. This area aligns with past support levels, prompting a bounce back to $3,800.
However, the Relative Strength Index (RSI) remains below 40, indicating weak momentum. Should the price close above $4,000, it could indicate a short-term recovery; otherwise, a failure to reclaim the channel could see ETH drop under the $3,000 mark, likely marking the end of the bullish phase.
ETH Daily Chart
4-Hour Chart
The 4-hour view shows Ethereum temporarily finding support in the $3,400 demand region after a significant drop. The RSI has fallen to an oversold level, now hovering around 24, which may hint at a potential short-term rebound.
Nevertheless, the $3,800 resistance remains crucial. A failure here could drive the price back toward $3,400, while a breakout may restore the path to $4,200.
ETH 4-Hour Chart
On-chain Analysis
Funding Rates
Funding rates across various exchanges have dropped into negative territory, reaching their lowest point since late 2024, as traders seek to reduce their long positions. This reset reflects fear and liquidation concerns, but it may also indicate a potential bottom if bearish sentiment persists as prices stabilize. Traditionally, negative funding during significant pullbacks has signaled upcoming short-term recoveries once selling subsides.
Thus, while the market appears to be entering a bearish reversal, there remains the possibility that this decline could merely serve to cool off the futures market and lay the groundwork for a sustainable rally driven by spot trading.
Ethereum Funding Rates
Disclaimer: The information provided in this article reflects the author’s views and does not necessarily represent the views of CryptoPotato. Always conduct your own research before making investment decisions.
