Ethereum was beginning to gain traction in the market, but the harsh and prolonged consolidation that produced virtually nothing and only pulled ETH to about $3,800 was a critical indicator that provided insight into the asset’s potential future performance.
Despite ETH’s early strong momentum, the price behaviour has surprised a lot of traders. Ethereum faced resistance around about $3,800, and then entered a consolidation period. This sideways pattern, often indicative of hesitation in the market, also heralded the recent downturn that we have witnessed.
In the past few days, Ethereum saw a sharp decrease that brought it dangerously near to $3,500. Many were surprised by this sudden downturn because, on the whole, the market had been feeling rather positive. There are several possible explanations for this abrupt behaviour. First, there might be serious issues with liquidity.
Reduced liquidity might lead to more noticeable fluctuations in price, as we have observed with various trading pairings on sites like Binance. The recent drop in Ethereum’s price might have been brought on by an unexpected drop in purchasing pressure, which would have made it easier for sellers to drive the price down. Investor mood is always relevant, as are macroeconomic factors.
Technical data suggests that there was a significant short-term sell-off of ETH. Recently, the Relative Strength Index (RSI) entered an oversold state. Reentry by purchasers into the market may indicate that a bounce is possible. Another concerning pattern seen in moving averages (MAs) is the crossing of shorter-term MAs below longer-term MAs, which is typically seen as bearish.
