Ethereum (ETH) is currently navigating a complex market scenario, with conflicting signals emerging from technical charts and on-chain data. While one set of indicators suggests a potential price correction, another points towards a rally to $4,500. This creates a challenging environment for traders and investors, requiring careful analysis of various factors before making any decisions.
Bearish Divergence on the Charts
Several technical indicators are flashing warning signs, suggesting that Ethereum may be due for a price pullback. A bearish divergence between the price and the Relative Strength Index (RSI) has been observed. This occurs when the price makes higher highs, but the RSI makes lower highs, indicating that the upward momentum is weakening. This divergence often precedes a price correction. Additionally, the Moving Average Convergence Divergence (MACD) indicator shows a bearish crossover on the daily chart, suggesting early signs of bearish momentum and a potential downward trend ahead. Ethereum also failed to hold above the ascending wedge breakout level, signaling a possible bull trap.
On-Chain Metrics Suggest Bullish Momentum
Despite the bearish signals from the charts, on-chain data presents a more optimistic outlook. These metrics, which analyze the data on the Ethereum blockchain, predict a potential rally to $4,500. Furthermore, ETH is trying to maintain above the breakout level of $3,745, signaling that the bulls are not hurrying to book profits as they anticipate another leg higher.
Institutional Interest and ETF Inflows
Ethereum continues to outperform because of strong institutional support, which keeps investors' interest high. The SEC has approved in-kind redemptions for ETH ETFs, which is expected to further increase institutional investment. Moreover, one firm recently purchased 77,210 ETH, exceeding the total amount minted this month. Corporate demand for ETH continues to strengthen, and institutional inflows via ETFs persist, increasing the chances that ETH reaches the psychological $4,000 level.
Potential Price Targets
If the bullish momentum prevails, Ethereum could initially target the overhead resistance at $4,094. A successful break above this level could pave the way for a rally towards $4,500 and potentially $4,868. Some analysts predict even more ambitious targets, with some forecasting a surge to $10,000 by the end of the year. BitMine, a Bitcoin mining firm, estimates that the ETH price could potentially hit $60,000 in the coming years.
Key Levels to Watch
Conversely, if the bearish signals materialize, Ethereum could face a pullback towards the 20-day SMA ($3,516), where buyers are expected to step in. A break below this level could lead to a correction towards $3,300, which could act as support. If ETH faces a pullback and closes below the daily support at $3,730, it could extend the decline to the next support at $3,500.
The Broader Market Context
The upcoming Federal Reserve's (Fed) interest rate decision could bring sharp volatility in the crypto market. While markets broadly expect the Fed to keep interest rates unchanged, any comments from Chair Jerome Powell could move markets.
Conclusion
Ethereum's current market position is characterized by conflicting signals. While chart divergences suggest a potential correction, on-chain metrics and growing institutional interest indicate the possibility of a rally. Traders are advised to monitor price behavior and volume confirmation around key levels before committing to long positions. Investors should remain attentive to both the potential for a sharp rally and the risks of a near-term pullback.
