Ethereum (ETH) price is en route to registering its worst August performance in the past five years. Despite a brief respite in the form of a two-day rally, ominous clouds are gathering over the cryptocurrency. A looming “death cross” – a technical indicator that often precedes price declines – is casting a long shadow.
What’s to happen next?
Could a Reversal Be Near?
While the situation seems grim, the worst for Ethereum’s price might be over. There could be another dip before a possible rally towards an all-time high. The daily Relative Strength Index (RSI) is still in the oversold zone, the lowest it has been since September last year.
Recent cash inflows into U.S. spot Ether ETFs have helped the Ethereum price rebound. In just the last two days, these ETFs have seen nearly $150 million in net inflows. BlackRock’s ETHA ETF, in particular, recorded about $109 million in net inflows on Tuesday, bringing its total holdings to around $704 million.
Network Advances
Ethereum has been preparing for widespread use of its smart contracts and Web3 protocols. Out of the $81 billion locked in the entire DeFi sector, Ethereum holds $47 billion. According to co-founder Vitalik Buterin, the network has made notable progress with layer two scaling solutions.
However, Buterin emphasizes that more focus is needed on improving interoperability between settlement and consensus layers.
ETH Price Action & Trends
Ethereum, as the leading altcoin, is waiting for a signal from Bitcoin’s dominance for a potential reversal. The ETH/BTC pair recently fell to a new multi-year low, suggesting that the altseason may not have started yet.
From a technical perspective, Ethereum is showing a pattern similar to past bull cycles, which could lead to a breakout to a new all-time high in the fourth quarter.
Key Support Levels
Despite the potential for a rally, Ethereum’s overall bullish outlook could be delayed if it consistently closes below the key support/resistance level of around $2,100.
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With a foundation of strong fundamentals, can Ethereum overcome its price challenges? Weigh in!