Ethereum looks weak around current price levels as trading volumes have dwindled. While Ethereum is on track to complete its “merger” with Proof-of-Stake this year, market sentiment has been subdued. A surge in downward pressure could take ETH to $900.
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Ethereum appears poised for major losses after failing to overcome a key hurdle in its trend. Despite expectations for a “consolidation,” selling pressure could resume if the $1,700 support level is breached.
Ethereum resumes its downtrend
Ethereum is weakening, while the trading volume in the cryptocurrency market is declining.
The second-largest cryptocurrency by market cap appears poised to resume its downtrend after encountering resistance at $2,150. Although Ethereum managed to hold $1,700 as support, it did not show enough strength to make significant progress. Current market conditions may encourage investors to close their positions in anticipation of lower lows.
Ethereum is on track to complete its long-awaited “merger” to proof-of-stake this year, which could be a bullish catalyst, but the launch date is likely months away. Ethereum recently completed its Merge testnet, and will next be piloting the update on the Ropsten testnet. With no final release date, crypto market sentiment remains low and Ethereum could face a major correction in the near term.
When considering that the dominant technical pattern behind Ethereum is a symmetrical triangle, the recent rejection could lead to a spike in selling pressure. The technical pattern predicts that Ethereum will enter a 64% downtrend after breaking the $2,500 support on May 9.
A daily candlestick close below $1,700 could further confirm the bearish outlook and lead to a sharp correction to $900.
IntoTheBlock’s Global In/Out of the Money model adds credibility to the bearish argument. It revealed that more than 2.24 million addresses were “underwater” after more than 26.33 million ETH were purchased between $2,130 and $2,400. These addresses can sell their assets in the event of another dip to avoid further losses, adding to the downward pressure.
In this case, transaction history shows the most critical support levels between $400 and $1,330, with 13.26 million addresses holding more than 13.1 million ETH.
Given the importance of the supply wall between $2,130 and $2,400, Ethereum may have to claim this area as support as an opportunity to invalidate the bearish outlook.
Disclosure: At the time of writing, the author of this article owns BTC and ETH.
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