Analysis: Ethereum's Future Hangs by a Thread – Recovery or Crash?

In recent weeks, the price of Ethereum has underperformed, a development that is mainly due to the bearish pressure created by the drop in the price of Bitcoin. After losing the support above $4.000, the second-largest cryptocurrency There are now clear signs in the market of a potential price decline that could trigger a negative spiral. Several analysts have shared their views on the direction the Ethereum price will take. Here, we examine two perspectives, each representing the extremes of the spectrum.

Recovery followed by a Crash

Crypto analyst Melikatrader has identified a key structure that has recently formed the Ethereum price: a clear recovery structure. This follows a liquidity sweep around $3.700, a process known as "hunting." This means that market participants have been opportunistically accumulating liquidity, which is common in bearish markets.

Now that this liquidity sweep has completed, it appears a base is being created that could lead to an upside correction in the Ethereum price. During this period, the altcoin saw some consolidation between $3.700 and $3.800, making this price range a key area of ​​interest. If buyers manage to claim and hold these levels, it could position Ethereum for a new uptrend. Such moves could end the accumulation phase and initiate a new bullish run, which could propel the price towards the next supply zone between $4.080 and $4.180 before a significant downside correction occurs.

However, the analyst emphasizes that Ethereum still exhibits a bearish market structure. With the rising trendline in motion, the price could encounter resistance around $4.100. If sellers are successful in rejecting the price at this level, Ethereum could fall below $4.000 again. This dynamic points to a more complex interaction between buyers and sellers, which is essential for investors to consider.

Analyst Predicts Ethereum Price Top

While many within the crypto community believe the current downtrend is temporary, crypto analyst CRYPTO Damus that this could possibly be the cycle top. In a post on X, he lays out a comparison between the current trend and the cycle tops of 2018 and 2021, using the weekly chart.

Damus points out the striking similarities between previous cycle peaks and current developments, with the Ethereum price appearing to follow a similar pattern this time around. This follows a period of consistent green candles, which were then followed by red candles on the weekly chart, resulting in a bear market. The analyst further states that, while the situation may be different now given the deviations in previous market cycles, if this is indeed a repeat of the last two bullish cycles, the conclusion could be that Ethereum's bull run is coming to an end. Investors should therefore prepare for a significant crash.

It is important that investors closely monitor these signals and structures in the market, as conditions can change quickly.

Frequently Asked Questions

What are the implications of the current bearish market structure for Ethereum?
The current bearish market structure may indicate continued price pressure, which should prompt investors to exercise caution and reassess their positions.

Can you explain what a liquidity sweep entails?
A liquidity sweep refers to the process by which market participants opportunistically acquire liquidity around critical price levels, often with the aim of exploiting a price differential.

How important is the $4.000 level for Ethereum?
The $4.000 level acts as a crucial support level; a break below could herald further declines, while stabilization above could increase the likelihood of bullish momentum.