What are the odds of Ethereum falling back under $4K again

Ethereum

After briefly falling to $ 3,888, Ethereum had seen a quick rally to $ 4,150 at the time of publication. In fact, ETH looked ready to re-test its immediate resistance at $4238. However, the correction should be taken more into account with how the fundamentals of the chain have acted.

There might be multiple factors in play at the moment, factors that may play a vital role in dictating the price direction for Ethereum.

Is a $ 4000 return inevitable for Ethereum?

For now, Ethereum’s price position is poised for a classic short entry after the asset failed to break through the resistance at $ 4,238 initially. The crossover between the 20-MA and 20-EMA also seemed to highlight bearish pressure which is insightful to how the asset may react in the next few hours.

However, regardless of the market structure, the on-chain development that took place over the past 24 hours also seemed to present a bearish outlook.

According to CryptoQuant, the ETH exchange leveraged ratio and Open Interest for Ether remained at an all-time high range and did not reset following the corrections. The initial drop in prices was identified due to over-leveraged markets, therefore the current situation suggests that another capitulation event is not down.

With respect to active addresses, a bullish divergence was observed between the price and the activity as it hit a 3-week high on the charts.

Now there are a few situations where the price can react in the short term and it would all depend on the dynamics of the market.

A quick stall period?

In line with the aforementioned observation, a correction down to $4000 is likely for Ethereum, but a period of consolidation in the current range is also viable. With the current down and up, the market dynamics will be more divided between profit takers and hodlers as sentiment would be a bit skewed and out of balance.

A strong bullish narrative will be confirmed for Ethereum if a 4-hour candle positively closes above $4238. However, the likelihood of this happening is minimal after the recent collapse. Hence, waiting for another re-test at $4,000 should be considered since ETH looks to re-settle its base for a long-term bullish leg.

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