After a prolonged period of quiet price activity near the crucial $1.8K level, ETH has undergone a significant and rapid decline following a notable rejection. This sudden drop has caused the price to break below the 100-day and 200-day moving averages (MAs), which is a bearish signal for the ETH market.
Looking at the daily chart, a prolonged phase of calm price action near the $1.8K resistance resulted in a sharp decline below the 100-day and 200-day EMAs located near $1,835 and $1,800, respectively. The market is generally considered to be in a bearish phase when the price remains below the 200-day moving average line, which is widely recognized as an important trend indicator.
The short-term support at $1,650 is currently managing to hold the price, potentially setting the stage for a bullish rally and a pullback. However, the recent decline has turned the market structure mostly bearish, raising the possibility of a retest of the $1,400 level in the coming weeks.
Looking at the 4-hour time frame, it became clear that the price broke the stable support at $1.8K, triggering a sharp and strong decline. This breakdown further deepened the decline, with a key wick penetrating the $1,650 level.
Nevertheless, the mentioned support level has effectively sustained the price so far, and the Relative Strength Index (RSI) indicator has made a comeback from the oversold region, indicating the possibility of a short-term consolidation phase.
Taking into account the recent price action, it looks like a consolidation period will develop between the $1,650 support and resistance near $1.8K in the medium-term. This scenario is anticipated before sellers make another concerted effort to potentially take the price lower.
Analyzing the funds holding metric, the chart indicates a significant trend change for Ethereum from June 2022. While bitcoin has experienced intermittent periods of price growth alongside various fund distribution areas, Ethereum has seen a steady decline in fund holdings and distribution during this period.
Interpreting this chart, it becomes clear that there has been a significant decline in the interest of asset management funds (such as ETFs and trusts) to invest indirectly in Ethereum. This is in contrast to bitcoin where, despite volatility, specific periods of increased demand and fund distribution can be identified.
The result of this trend is a gradual decrease in the fund’s market share, which leads to a decrease in trading liquidity and overall interest in Ethereum. For the market to experience sustainable value growth, it is important to have a steady increase in investment interest from these funds.
For the time being, this decline in fund engagement requires a cautious approach, especially when viewed in conjunction with other data points. Constantly tracking the trends of this indicator can provide potentially valuable insight in determining the future trajectory of the Ethereum market.
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Cryptocurrency charts by Tradingview.