Ethereum Price Faces Resistance as Bulls Lose Momentum
The recent bullish wave in the cryptocurrency market gave hope to investors that the retracement seen earlier in the week was temporary. However, a 2.6% drop in Ethereum price within 24 hours has dimmed the optimism for an immediate rally towards all-time highs.
Ethereum Price Prediction: Futures Open Interest and Market Sentiment
Over the weekend and early this week, Ethereum experienced a significant price drop, causing losses for many investors. Liquidations reached millions of dollars as Ethereum tested support at $3,050.
The derivatives market also suffered a decline, with open interest dropping from a record high of $13 billion in March to $11.34 billion. While there has been a slight recovery to $11.7 billion, further corrections are possible.
Decrease in Derivatives Market Activity
- A decrease in derivatives markets’ open interest indicates reduced trader activity and confidence in the market.
Impact of DeFi Total Value Locked (TVL)
- The total value locked (TVL) in decentralized finance (DeFi) has decreased from $57.59 billion to $50.63 billion.
- Decreased TVL can add to selling pressure as investors withdraw their holdings from staking contracts.
Analyzing Ethereum’s Technical Structure
After reaching a high of $3,640, Ethereum faced a correction due to a lack of momentum. The 38.2% Fibonacci level is currently acting as support, but there are indications of a potential retracement.
Potential Resistance and Support Levels
- Based on blockchain data, Ethereum may struggle to reach the $4,000 mark in the short term.
- The region between $3,615 and $3,715 represents a significant supply zone with 727,000 addresses holding 4.22 million ETH.
- If Ethereum recovers to this level, investors in this cohort may decide to sell, dampening the uptrend and triggering another sell-off.
- Support areas have been weakening, which could lead to further losses down to $2,400.
In conclusion, the recent drop in Ethereum price has raised concerns among investors who were hopeful for a continued rally. The decrease in derivatives markets’ open interest and the decline in DeFi TVL contribute to the bearish sentiment surrounding Ethereum. Additionally, technical analysis suggests that Ethereum may face resistance at the $4,000 mark and could potentially experience further losses. It is important for investors to closely monitor these factors and adjust their strategies accordingly.
Hot Take: Ethereum’s Future Outlook
While the recent price drop may be discouraging for some investors, it is important to remember that the cryptocurrency market is highly volatile and unpredictable. Factors such as market sentiment, regulatory developments, and technological advancements can significantly impact Ethereum’s future outlook. It is crucial for investors to conduct thorough research and stay informed about these factors in order to make informed investment decisions.
Sources:
Defi Llama
IntoTheBlock
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