Market Overview
Ethereum (ETH) is showing mixed signals as technical indicators point to a potential rally while on-chain metrics raise concerns. The second-largest cryptocurrency has experienced a sharp 20% correction, dropping from $2,805 to $2,200 and wiping out $80 billion in market value. Recent analysis warning of potential support tests appears to be playing out, though some analysts see bullish reversal signs emerging.
Technical Analysis Signals Hope
Crypto analyst Merlijn The Trader has identified the Wyckoff Reaccumulation Pattern in ETH’s price action, suggesting an accumulation phase may be underway. The pattern’s “spring phase” activation could indicate a bear trap, potentially catalyzing a rally toward $4,000.
Supporting this bullish outlook, analysts have noted:
- Bullish divergence on the 4-hour chart
- Immediate resistance target at $2,700
- Wyckoff pattern completion suggesting accumulation
Whale Activity Adds Bullish Momentum
Major whale movements have caught market attention, with one significant player acquiring 17,855 ETH ($36 million) at an average price of $2,054. This whale now holds approximately $2.53 billion worth of ETH, demonstrating strong institutional confidence.
SPONSORED
Trade Ethereum with up to 100x leverage and maximize your profit potential
Exchange Reserves Raise Red Flags
However, concerning signals have emerged from exchange data. Over 610,000 ETH has moved to exchanges in the past two weeks, potentially indicating increased selling pressure. This aligns with ETH’s relative underperformance compared to competitors like Bitcoin, Solana, and XRP over the past two years.
Market Implications
The current market structure suggests a critical juncture for ETH:
- RSI at multi-year lows indicates oversold conditions
- Extreme bearish sentiment could act as a contrarian indicator
- Current price ($2,200) shows 6% recovery in 24 hours
Conclusion
While technical indicators and whale activity paint a bullish picture, rising exchange reserves warrant caution. Traders should watch the $2,700 resistance level for confirmation of trend reversal. The extreme bearish sentiment could paradoxically set the stage for a significant recovery rally.