Ethereum’s price has not yet shown any willingness to recover following the recent drop from the critical $2,000 resistance area. However, while the cryptocurrency is consolidating in a tight range, there are some signs indicating the probable price action in the short term.
Technical Analysis
By Edris
The Daily Chart
On the daily timeframe, the price has been holding around the $1,650 support level over the last few days after a decisive rejection from $1,750 earlier.
Given the current price behavior and the overall market structure, it seems more likely that the price will experience a deeper drop toward the $1,400 level than a rebound and rally toward the $2,000 zone. The 50-day and 200-day moving averages have also printed a bearish crossover, which is a negative trend signal that could result in another crash in the coming days.
The 4-Hour Chart
Looking at the 4-hour timeframe, things look even worse as the momentum is clearly in favor of the sellers. The price has been struggling with the $1,650 support level for quite some time, and a breakdown seems more likely.
The RSI indicator is also showing values below 50%, indicating bearish momentum in this timeframe and increasing the chances of a further decline. This scenario will fail if the $1,650 level holds and pushes the price back above the $1,750 resistance zone.
On-Chain Analysis
By: Edris
Ethereum Funding Rates
Although Ethereum has been mostly bearish over the past few weeks, we can analyze the futures market to see how futures traders expect the price to shape up in the short term.
This chart shows the Ethereum funding rates metric, which represents periodic payments to traders who are either long or short based on the difference between perpetual contract markets and spot prices. Funding rates reflect traders’ sentiments in the perpetual futures market, and the amount is proportional to the number of contracts. Positive funding rates indicate bullish sentiment, and negative ones indicate bearish expectations by traders.
It is clear that while the price has been decreasing recently, the funding rates remain positive. This suggests that futures traders are still hopeful about ETH, anticipating a potential rally in the near future. However, positive funding rates could lead to a long liquidation cascade, which could cause another decline.
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Source: https://cryptopotato.com/eth-price-depressing-but-is-a-bounce-to-1-8k-in-play-ethereum-price-analysis/