Ethereum, the world’s second-largest cryptocurrency, has been on a rollercoaster ride lately, dipping below the psychologically important $3,000 threshold only to claw its way back, Ethereum’s price action has been a confusing mix of bullish and bearish signals.
Bullish Whispers: New Investors And Short-Term Spikes
A glimmer of hope emerged for Ethereum bulls with a recent surge in new addresses on the network. According to Glassnode data, the number of new Ethereum addresses has skyrocketed, surpassing 160,000 – a stark contrast to the lows of under 100,000 witnessed in January.
This influx of new users suggests growing interest and potential investment in Ethereum, even amidst its recent struggles.
Source: Glassnode
Source: Furthermore, technical indicators on the 4-hour chart hint at a possible short-term upswing. Analysts at NewsBTC point towards increased volatility, signified by the widening Bollinger Bands, which could pave the way for a temporary price hike. This strategic move by the market might be aimed at luring in buyers before the prevailing downtrend resumes.
Bearish Shadow Looms: Market Sentiment And Technical Trends
However, the jubilation may be short-lived. The overall market sentiment surrounding cryptocurrencies remains decidedly negative, a trend persisting since the much-anticipated Bitcoin halving event in April failed to deliver a significant market surge, data from Santiment shows, suggesting investor caution despite the brief price recovery.
😒 The sentiment toward #crypto‘s top cap assets is still rather negative. This has been the case since the April 19th $BTC #halving didn’t immediately result in rising market caps throughout #cryptocurrency. With uncertainty high, small wallets dropping out of the sector may be… pic.twitter.com/7FXYheGnX0
— Santiment (@santimentfeed) May 9, 2024
Adding fuel to the bearish fire, Ethereum’s daily chart continues to paint a hazy picture. Technical analysts point towards sustained breaks in price structure to the downside, indicating a potential continuation of the downtrend. Even the Relative Strength Index (RSI) sits at a low 40, further reinforcing the bearish sentiment gripping the market.
Ethereum is now trading at $2,904. Chart: TradingView
Chart Patterns And Breakout Potential: A Neutral Take
Amidst the conflicting signals, seasoned trader Peter Brandt offered a more neutral perspective. Analyzing Ethereum’s price chart, which he described as “intriguing,” Brandt identified two potential technical patterns: a flag and a channel.
ETH $ETH is becoming a very intriguing chart to me
The pattern is too long to be considered a flag, but a channel is the most likely labeling
I could go either way with this chart pic.twitter.com/EeSa7SyAmA— Peter Brandt (@PeterLBrandt) May 9, 2024
While a flag typically signifies a continuation of the current trend after a brief pause, a channel allows for price movement within a defined range. The ambiguity surrounding the exact pattern suggests a potential breakout in either direction, leaving Ethereum’s immediate future uncertain.
Ethereum: The Road Ahead
With conflicting technical signals and a market shrouded in negativity, Ethereum’s future trajectory remains shrouded in uncertainty. While short-term price spikes are a possibility, the long-term trend appears to be leaning bearish.
The coming weeks will be crucial for Ethereum, as it navigates these turbulent waters and attempts to chart a clear course in the coming weeks or months.
Featured image from Pexels, chart from TradingView
