Ethereum (ETH) Faces Volatility Amid Death Cross and Key Fibonacci Levels Testing

• Ethereum [ETH] has been battling significant price drops, pushing it well below the $3,000 mark.
• The cryptocurrency has recently attempted a bounce-back rally.
• However, Ethereum’s daily active addresses have consistently stayed above 400,000.

Explore the current state of Ethereum (ETH), its recent price movements, and what key technical indicators may suggest for the future.

Ethereum Faces Continued Price Pressure

Ethereum has been experiencing a tough period over the last few weeks, with its price declining sharply. Despite a rally that saw a 14.56% increase on 8 August, ETH couldn’t hold above the critical $3,000 level. As a result, volatility might be on the horizon for the cryptocurrency.

Technical Indicators Signal Bearish Sentiment

One of the most alarming signs for Ethereum has been the appearance of a death cross in its technical charts. This formation indicates long-term bearish trends. On 9 August, after a further drop of 3.10%, ETH’s price fell to around $2,601, confirming the death cross. This crossing over of short-term moving averages below long-term ones often signifies extended bearish periods.

Analyzing the Momentum

The Moving Average Convergence Divergence (MACD) indicator paints a grim picture as well, with the MACD line below the signal line, indicating negative momentum. Nonetheless, a closer look at the MACD histogram suggests that the bearish trend might be weakening as the negative bars are lessening in effect, hinting at a potential market reversal soon.

Probable Scenarios Based on Fibonacci Retracement

Using the Fibonacci Retracement tool, Ethereum’s price movements present several scenarios. Currently, ETH is challenging the 0% Fibonacci level at approximately $2,589.77. Should the price sustain above this mark, next resistance could be at $2,870.67 (38.6% retracement) and $2,953.64 (50% retracement). Successful advancement beyond the 50% level may point to a further rally towards $3,039.51 and potentially higher.

Possible Downside Risks

However, should Ethereum fail to hold the 0% Fibonacci level, the risk of revisiting lower support levels becomes prominent. Dropping below $2,418.02 (23.6% retracement) could pave the way for retesting the recent bottom near $2,140. Increased bearish pressure might even push ETH below the latter, creating new lower lows.

Ethereum’s Historical Death Cross Analysis

Evaluating Ethereum’s death crosses over the past three years provides additional context. The market witnessed its first death cross on 27 January 2022 when ETH was approximately $2,500, pulling back to around $1,500 but eventually recovering by 10 February 2023. Another death cross occurred on 2 September 2023, with ETH valued at $1,600, which was short-lived and followed by a golden cross in November, leading the price to surge past $4,000 in early 2024.

Daily Active Addresses: A Mixed Bag

Despite recent inactive trends, Ethereum’s daily active addresses remained above the 400,000 mark. Although numbers fell from over 470,000 on 3 August to about 425,000 by 9 August, the count still demonstrated stable network activity. Should active addresses fall further, it might exert downward pressure on ETH’s price. On the other side, stabilization or an increase coupled with breaking through key resistance levels could signify a stronger recovery.

Conclusion

Ethereum’s near-term prospects appear hinged on crucial price levels and technical indicators. Sustaining above essential Fibonacci levels while monitoring active address trends will be vital in assessing if ETH can shake off its bearish momentum and embark on a path of recovery. Investors should remain cautious and look for confirmed signals before making definitive market moves.