Ethereum has been facing a bearish trend recently, with a notable decline in its price following a pullback to the lower boundary of a broken wedge pattern. This decline has been further exacerbated by the formation of a death cross, where the 100-day moving average crosses below the 200-day moving average. These factors have instilled fear and uncertainty among market participants, leading to low inflows into spot ETH ETFs and signaling reduced investor interest.
The rejection at the lower boundary of the multi-month wedge and the 0.5-0.618 Fibonacci levels have confirmed the strength of sellers in the market. However, Ethereum is now approaching a critical support zone, defined by the static $2.1K level and the 0.786 Fibonacci retracement level at $2,067. This support zone is expected to attract substantial demand, potentially leading to a short-term sideways consolidation phase before the next move in Ethereum’s price is determined.
On the 4-hour chart, Ethereum was firmly rejected from the resistance zone between the 0.5 ($2.6K) and 0.618 ($2.7K) Fibonacci levels, indicating continued bearish momentum towards the $2.1K support level. This support level has previously held, particularly in early August, suggesting that buyers might step in to accumulate at these price points. If demand resurfaces at the $2.1K mark, Ethereum could experience a temporary consolidation phase, putting a pause on the downward pressure.
However, a breach of this crucial support level could trigger a long-liquidation event, potentially driving Ethereum’s price down towards the $1.8K region. The next few days will be crucial in determining whether Ethereum can hold the support at $2.1K or if a deeper correction is on the horizon.
Ethereum’s value is fundamentally tied to its decentralized network and the active engagement of its users. One key metric that can gauge this engagement is the number of unique active addresses on the network. The chart showcasing the 14-day moving average of Ethereum Active Addresses reveals a rapid decline since late March 2024, indicating a drop in user activity and transaction volumes.
This downward trend in active addresses reflects the bearish market sentiment, with reduced demand and lower investor participation. For Ethereum to recover and potentially start a sustainable rally, this trend must reverse. An increase in the number of active addresses would signal growing interest in Ethereum, accumulation of the asset, and the potential for a bullish market reversal.
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