Ethereum Stalls Below $4,000 After Weekly Rally: Consolidation or Correction?

Ethereum (ETH), the world’s second-largest cryptocurrency by market capitalization, has seen its price hover stubbornly below the $4,000 mark in recent days, despite registering over 10% gains in the past week. This consolidation phase has analysts pondering whether it’s a healthy pause before further ascension or a sign of a potential correction.

ETH/USD Technical Analysis Paints a Mixed Picture

Looking at the ETH/USD technical indicators:

• Resistance: The immediate hurdle for ETH bulls lies at the $3,850 level. A decisive break above this point could propel the price towards $4,000 and potentially higher.
• Support: The first line of defense in case of a pullback sits at $3,740. A clear breach below this level could see ETH revisit the $3,650 zone or even the 50% Fibonacci retracement level of the recent rally, around $3,550.
• Moving Averages: The 20-day and 50-day Exponential Moving Averages (EMAs) are currently acting as dynamic support for ETH prices, indicating a short-term bullish bias.
• Momentum Indicators: The Moving Average Convergence Divergence (MACD) on the hourly chart is losing some momentum in the bullish zone, suggesting a potential slowdown in the upward trend. However, the Relative Strength Index (RSI) remains above 50, signifying that the market isn’t yet overbought.

Possible Reasons for Consolidation in Ethereum Price

Several factors could be contributing to ETH’s current consolidation:

• Profit-taking: After a significant weekly rally, some investors might be taking profits, leading to a temporary price pullback.
• Wider market correction: If the broader cryptocurrency market experiences a correction, ETH could be dragged down along with it.
• Macroeconomic factors: Global economic uncertainties, such as rising interest rates, could dampen investor sentiment across riskier assets, including cryptocurrencies.

Latest Developments to Know Before Trading Ethereum

• Spot Ethereum ETF Approval Delays: Fox Business journalist Eleanor Terret reported diminishing optimism surrounding the U.S. Securities and Exchange Commission (SEC) approving spot Ethereum ETFs by May 23rd. Her sources suggest a lack of engagement from the SEC staff compared to Bitcoin ETF applications. Additionally, prominent anti-crypto politicians are reportedly opposing Ethereum ETF approval.
• Ethereum’s Quantum Readiness: Ethereum co-founder Vitalik Buterin expressed confidence in the platform’s ability to counter a potential quantum computing attack through a hard fork and new transaction types. This would involve a network rollback and user software updates to protect existing wallets.
• DeFi Resurgence: The decentralized finance (DeFi) ecosystem has seen a significant uptick, reaching a $100 billion total value locked (TVL) for the first time since May 2022. Ethereum maintains its dominance in DeFi with a 59% market share. Lido, an Ethereum-based staking protocol, remains the leader with $39 billion TVL.

Looking Ahead

The next few days will be crucial for determining the direction of ETH’s price. A sustained break above $3,850 could signal a continuation of the uptrend. Conversely, a drop below $3,740 with increasing selling pressure could indicate a more significant correction.

ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

Related Articles

Dogecoin Price Prediction Eyes $1—But Can $0.185 Hold?

12 hours ago

Save

Big Bet on Solana (SOL)—$500M Funding Fuels Staking Push

15 hours ago

Save

Ondo Finance Surges as CEO Engages with SEC on Tokenized Securities Framework

19 hours ago

Save

Comments

0 0 votes

Article Rating

Subscribe

Login

Notify of

new follow-up commentsnew replies to my comments

Please login to comment

0 Comments

Oldest

Newest Most Voted

Inline Feedbacks

View all comments