Ether is showing first signs of reversal as divergence appears on intraday chart
The sell-off in the cryptocurrency market caused billions in losses for retail and institutional investors who held Bitcoin and other cryptocurrencies. But Ethereum’s performance was arguably one of the worst cases in the entire market, given its capitalization and liquidity.
Despite the catastrophic technicals and macros of Ethereum, we are seeing the first sign of a potential short-term reversal, the Relative Strength Index suggests. The price indicator divergence is quite often used to determine short-term reversal points at the end of each rally.
In the current case of Ethereum, the price of the cryptocurrency is showing quite strong divergence with the indicator over a four-hour period. The daily timeframe, unfortunately, has no signals that might suggest the medium-term reversal is near.
The divergence with the indicator had been forming since June 13.
Macro data remains alarming
The main driver of the current bearish rally is the negative macro data which includes massive volumes of in-place liquidations, derivatives and lending markets. With most investors liquidated, no new funds hit the market, leaving it with only heavy selling pressure.
The last two weeks were the hardest for Ethereum in a long time, including massive liquidation volume on the lending and borrowing market, with Celsius facing risks of liquidation, 3AC losing investors’ funds and Beacon Chain experiencing a block reorganization that questions the security of Ethereum 2.0. At press time, Ethereum is trading at $1,033.
Ethereum is not the only one having tough times as the entire DeFi sector is bleeding as no new funds are coming in and the biggest players are exiting the market for good.
