Ethereum Price Analysis

Ethereum price remains in a bear market this year as the second-largest cryptocurrency lacks a clear catalyst. The ETH coin was trading at an extreme oversold level of the Murrey Mathe Lines at $2,220, down by almost 50% from its peak in December last year. So, is it safe to buy the ETH dip?

Technical Analysis of Ethereum Price

The daily chart indicates that ETH price has crashed over the past two months. After peaking at $4,088 in November last year, it fell to $2,220, slightly below the key support level of $2,182, the lowest swing on February 13.

ETH price has dropped beneath the 50-day moving average, indicating that bears currently have control. Additionally, it has moved below the Ichimoku cloud indicator. Signs suggest the formation of an inverse head and shoulders pattern, typically a bearish continuation signal.

Oscillators continue to trend downwards. The Relative Strength Index (RSI) has fallen into the oversold territory, while the Percentage Price Oscillator (PPO) has dipped below the zero line.

Therefore, the outlook for Ethereum is bearish. The 50% drop compared to its November high suggests a price target of $1,125. This target will be invalidated if the coin surpasses the pivot level at $2,812, indicating further gains with the next significant level at $3,500.

Factors Behind ETH Price Decline

Several reasons contribute to the current crash of the ETH coin. First, weak demand from both retail and institutional investors is evident, highlighted by Ethereum ETF inflow and outflow data.

Ethereum has experienced outflows for seven consecutive days, with its total inflows since inception at $2.28 billion and total Ethereum ETF assets at approximately $8 billion. Monitoring these inflows and outflows is a good measure of demand from the US.

The staking market also mirrors this decline, with Ethereum ETF outflows rising over the past months. The Ethereum staking market cap sits at $74 billion, reflecting a nearly 20% drop over the past week.

Recent data shows Ethereum balances on exchanges increasing, which indicates that investors may be selling their holdings. Balances rose to 15.38 million from 14.9 million the previous month.

Additionally, Ethereum futures open interest has declined sharply, dropping to $19 billion, down from over $30 billion last year. This performance suggests that demand is waning.

Moreover, the decline in ETH price aligns with the downward trend in other cryptocurrencies, including Bitcoin, which fell from $109,200 to $85,000.

The current Ethereum price drop also coincides with intensified competition from other blockchain platforms like Solana and BNB, especially from prominent layer-2 networks such as Base, Arbitrum, and Optimism.

Source: Invezz

Summary

Ethereum’s price is currently in a bear market, having dropped nearly 50% from its peak, with weak demand and increasing competition contributing to the decline.