This indicator might potentially show us second biggest cryptocurrency on market will act in next few weeks
The merge update that everyone has anticipated for the past few months did not lead to the expected surge in Ethereum, causing more problems for investors than benefits. The asset’s profitability fell by more than 10%, and Bloomberg analysts believe this is not the end.
Issues with price momentum
The 22% loss dragged ETH to the oversold zone on the Relative Strength Index and, historically, this is not a good sign for the second biggest asset on the market. Investors who had previously been betting money on the reversal after the asset reached the oversold zone lost their holdings.
However, the data provided by Bloomberg is measured over a 20-day period, which is not as significant for the asset reaching the oversold zone on the RSI. For example, back in June, Ethereum reached the same oversold range and exited it only after a 30-day consolidation period.
The short-term momentum on Ethereum is indeed bearish not only because of the RSI. The drop below crucial moving averages like the 50-day moving average is a sign of an upcoming plunge, further considering the lack of growth factors that would push Ether back into the bullish price range.
The trading volume on the asset also suggests that the market is likely to face a continuation of the downtrend and Ether will drop even further. However, the recovery from the recent rate hike could have an impact on the cryptocurrency market in general.
With the easing of the monetary policy, Ethereum and other high-risk assets might face the return of the buying volume and risk demand. At the same time, the current monetary policy tightening cycle is expected to last at least until the beginning of 2023.
