Ethereum Price Challenges Persist Amid Faltering Institutional Interest and Signal of Potential Support Areas
Continuing its decline, Ethereum (ETH) registered downward movement for the third consecutive day on Wednesday, failing to break through the $2,700 resistance level earlier in the week, according to FXStreet reports. Despite a decrease in average transaction fees that could drive network utilization, concerns linger over weak institutional demand spotlighted by the Coinbase Premium Index.
Traditionally, reduced transaction fees have correlated with heightened activity on the Ethereum network. Santiment data revealed a significant drop to $1.63 in average fees on Tuesday, a level typically encouraging increased trading frequency. This price dip could pave the way for a potential upswing, potentially fueled by a short squeeze scenario, as per previous analyses.
Conversely, the Ethereum Coinbase Premium Index reflects a pessimistic stance, consistently maintaining levels below neutrality. Monitoring the price variance between Coinbase Pro (USD) and Binance (USDT) for Ethereum, this index serves as a crucial gauge for major investors, commonly referred to as “whales,” currently standing at -0.075. The sustained decline since early October implies escalating selling pressure, possibly adding to Ethereum’s challenges if the trend persists.
Technically, Ethereum faces a critical juncture nearing its 50-day Exponential Moving Average (EMA) at $2,564. Facing resistance from its descending trendline drawn from multiple peaks post late May, the cryptocurrency saw a 4.5% reduction by Tuesday. A breach and closure below the 50-day EMA could lead to the next support threshold around $2,461.
Examining momentum indicators, the Relative Strength Index (RSI) stands at 51, showing a downward trajectory after hitting an overbought level of 70 on Sunday. This decline indicates a weakening bullish momentum; further drop below the neutral benchmark of 50 might trigger a more substantial downturn in Ethereum’s value.
To sum up, while dwindling transaction costs indicate potential network activity growth, prevailing weak institutional interest and bearish signals from crucial market metrics advise caution for investors. With pivotal support levels and momentum indicators under scrutiny, Ethereum’s short-term outlook remains uncertain, emphasizing the need for diligent monitoring by traders and investors alike.
