Ethereum (ETH) is currently experiencing a critical phase as its price action hovers around the $2,700 level. Despite a recent 3.5% price increase over the last seven days, Ethereum has struggled to surpass the $2,800 resistance level.
The price of Ethereum has marginally recovered and is now trading around $2,773.74 in current market prices. There have been consolidating moves over the last couple of sessions with a feeble attempt to rally. That said, the resistance at $2,800 has remained intact since attempts to break above continue to be frustratingly futile.
However, what is probably an even more critical resistance level for Ethereum's short-term is around $2,800. Analysts say a sustained move beyond this level could spur a rally towards $3,100, where minimal resistance exists. On the downside, failure to break through this level might result in a pullback, which could test the lower support levels at around $2,670.
While Ethereum's price action has the potential to trigger further gains, on-chain data suggests a slump in network activity that could sabotage any moves toward the upside. Active addresses on the Ethereum network have dropped 35% in the last month, thus revealing an ugly and poor user engagement rate and little utility in the general network.
This downward trend attests to fewer users transacting, deploying smart contracts, or interacting with dApps on the Ethereum network. That would leave the price of Ether struggling to maintain an upward direction, especially if network activity continues to lag.
The juxtaposed sentiment of long-term and short-term holders complicates the outlook for Ethereum. Long-term holders are positioning bullish, seemingly looking at the latest drop in price as just a temporary setback. On the other hand, short-term holders are into capitulation, not showing much optimism regarding recovery over the near term, which might add more pressure to sell in case key resistance levels are not breached.
Technical indicators in the weekly chart for Ethereum put up a mixed picture—the Alligator is edging closer to a bullish signal to align as its green line or lips head north, underpinning the rising buying interest.
However, the MACD shows dwindling momentum, with the contracting histogram bars close to the baseline, suggesting a potential slowdown or consolidation phase. The Relative Strength Index sits around 67.55, so it is pretty close to overbought but still supports the existing bullish sentiment. If the RSI continues to rise high, it might indicate overbought conditions with the possibility of a pullback.
The market sentiment is cautiously positive, and traders are eying the resistance at $2,800. A breakout above this level may trigger a rally toward the $3,100 price level, while a failure could result in a period of consolidation or a move lower to test support levels.
Beyond the immediate price action, what many perceive as a key indicator for Ethereum's long-term prospects remains firmly pinned to broader market trends and network developments. In the general sense of the cryptocurrency market, things have noted a rather positive bounce back, in which some altcoins have attracted demand despite Ethereum's recent struggles. This come amid Fed rate cut speculation increasing after Jerome Powell’s speech yesterday, a bullish period may be looming.
However, the reduction in network activity experienced by Ethereum may be a bearish signal, suggesting that internal dynamics may be preponderant for its lackluster price performance. Where analysts remain divided on Ethereum's long-term outlook, some think that a weekly close above $2,800 might set the stage for a move towards $3,500, while others argue that, unless network activity picks up, the digital coin might continue to face downside pressure.
The near-term importance will be Ethereum's ability to maintain itself above $2,600 support. This will preserve the bullish sentiment and drive an upside breakout above $2,800. On the other hand, failure to hold above critical support levels could render the uptrend invalid in the near term and result in a retest of price points on the lower side.