Ethereum has been facing a strong downtrend, causing fear and uncertainty among market participants. The low inflows into spot ETH ETFs have further emphasized this sentiment, indicating reduced investor interest. The appearance of a death cross, where the 100-day moving average crosses below the 200-day moving average, has added to the bearish outlook. Following a rejection at the lower boundary of a multi-month wedge and key Fibonacci levels, Ethereum has continued its decline, showcasing the dominance of sellers in the market.
Critical Support Zone Approaching
Despite the bearish trend, Ethereum is approaching a critical support zone around the $2.1K level and the 0.786 Fibonacci retracement level at $2,067. This area is expected to attract substantial demand, possibly leading to a short-term pause in the downtrend. If the support holds, Ethereum may experience a temporary consolidation phase before its next move is determined. However, breaching this crucial support could trigger a long-liquidation event, pushing the price down towards the $1.8K region.
Active Engagement Key to Recovery
Ethereum’s value is closely tied to its decentralized network and user engagement. One key metric to measure this engagement is the number of unique active addresses on the network. This metric serves as a proxy for Ethereum’s market demand and valuation. The chart displaying the 14-day moving average of Ethereum Active Addresses indicates a significant decline since late March 2024. This drop reflects a decrease in user activity and transaction volumes, signaling a bearish market sentiment with diminished demand and investor participation. For Ethereum to recover and potentially initiate a sustainable rally, there must be a reversal in this downward trend. An increase in the number of active addresses would signify a rising interest in Ethereum, indicating stronger demand and the potential for a bullish market reversal.
