Has ETH Bottomed Or Are More Downsides Coming?

ethereum price has seen a sharp decline following increased selling activity, reaching the decisive 100-day moving average of $3.1k.

This level represents a crucial support zone and a possible turning point for the cryptocurrency's next move.

Technical analysis

By shayan

The daily chart

ethereum's bearish momentum has taken its price to the 100-day moving average of $3.1k, a region of important psychological support. This level is expected to provide notable demand as it coincides with key technical indicators. However, selling pressure has highlighted the dominance of bearish sentiment, leaving the market in a precarious position.

If ethereum manages to hold above this support, it could trigger a bullish bounce, easing concerns of further declines. Conversely, a break below the $3.1k support and subsequent break of the 200-day MA would likely trigger a cascade selling, with the price potentially targeting the $2.5k level as the next zone of significant support.

The 4 hour chart

On the 4-hour time frame, eth price action reveals the consequences of breaking out of a rising wedge pattern, a bearish technical structure that often precedes dips. This breakout has caused a rapid sell-off, and the asset now sits near a support range defined by the 0.5 to 0.618 Fibonacci retracement levels.

This support range is expected to temporarily stabilize the price, potentially initiating a short-term bullish bounce. However, the market remains nervous as continued bearish pressure could lead to a break below this support region. In such a scenario, the bearish pullback is likely to extend, further solidifying sellers' control in the near term.

Chain analysis

By shayan

ethereum's overall bullish trend is at risk as funding rates, a key indicator of derivatives market demand, show mixed signals. While rates spiked mid-rally, their sharp decline after the rejection of $4,000 resistance highlights traders' waning commitment.

The initially delayed increase in funding rates indicated cautious optimism. However, its subsequent notable drop indicated that it reduced demand, weakening eth's bullish momentum. Without renewed confidence from traders, sustaining the rally becomes a challenge. The $3,000 support level is vital and holding it above could stabilize the market and reignite bullish momentum. However, a breakout can lead to intensified selling and a deeper correction.

Overall, ethereum's prospects depend on regaining higher funding rates and defending $3,000. These factors determine whether the market resumes its uptrend or faces further corrections.

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