Ethereum has been trying to make a grand entrance above the $2.6K mark, but alas, it was a false alarm! Like a magician's disappearing act, the breakout vanished, leaving ETH with a sharp drop instead.
This little escapade suggests that Ethereum might continue its downward journey, eyeing the $2.1K support level like a lost traveler searching for a signpost.
The daily chart is waving a red flag for Ethereum enthusiasts. Remember last August when ETH tried to break free from its descending channel only to be shown the door? Déjà vu! It happened again. The price tip-toed above $2.6K, but couldn't hold its ground, plummeting by 15%. This retreat reveals the sellers flexing their muscles and ruling the roost.
Now, Ethereum is inching closer to the $2.1K safety net, a level with a history of being the knight in shining armor. We might see ETH cozying up in a descending consolidation phase, gradually sliding towards this crucial zone.
Zooming in on the 4-hour chart, Ethereum's struggle to keep the bullish vibe alive at the 0.5 ($2.6K) – 0.618 ($2.8K) Fibonacci levels conjured a bearish three-drive spell. This ominous pattern, along with a divergence between price and RSI, hinted that the sellers were back in action. As a result, Ethereum took a nosedive towards the $2.3K boundary.
Sellers are now on a mission to push Ethereum below this line, potentially kick-starting a fresh downward adventure. If this scenario unfolds, the next milestone for ETH could be the $2K psychological fortress. But don't count out the $2.1K zone just yet; it's not ready to wave the white flag.
Let's talk about the bigger picture. The 50-day moving average of Ethereum’s funding rates is painting a clearer picture of the market mood. These rates have been on a downward slope, hitting a low point in 2024. This ongoing trend points to a bearish vibe among futures traders, with short-sellers taking the lead.
For Ethereum to rise like a phoenix, the perpetual futures market needs to rally with more buying interest. The drop in funding rates suggests aggressive selling is overshadowing any buying enthusiasm, hinting at a bearish outlook for the mid-term.
However, don't count out a plot twist! While negative funding rates typically spell trouble, they can also pave the way for a market reversal. This could happen if short positions get liquidated, sparking a price surge. For this magic trick to work, though, the spot market needs to step up with substantial buying power to fuel a rebound.
