The market is bleeding – The market has been in constant decline for two months, Bitcoin has chained eight consecutive red candles. He is even on his way to closing a ninth week in the red. It is sadly historic. On his side, Ethereum held up well against Bitcoin’s fall until this week when it took a beating. Indeed, Ethereum lost 16% while Bitcoin only lost 7%. Ethereum being the leader of altcoins, Ethereum must manage to maintain itself so that altcoins can regain color. Is Ethereum challenging its long-term trend? Are we on very interesting levels to think about buying? Let’s look at the graphs!
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- Ethereum Technical Analysis
- Storm warning on the monthly chart
- Ethereum in weekly scale
- Ethereum daily
- Derivative Markets and Its Implications for Ethereum
- The Binance Perpetual Contract
- Update on the liquidations of players in the derivatives markets
- Market sentiment study and on-chain analysis regarding Ethereum
- Ethereum Market Sentiment Drops, But No Capitulation
- On-chain analysis: wallets with more than 10,000 ETH back in the accumulation phase
Ethereum Technical Analysis
Storm warning on the monthly chart
There are a few days left in Ethereum for save the month. If the monthly close stays like this, Ethereum could challenge the trend previously known:
Graphically it would be very negative that Ethereum closes the month below $2,155. Buyers must absolutely hold this level so as not to build a bearish “M” pattern that would reverse the dynamic. The last time this event happened was in August 2018 and the price experienced three months of decline additional passing Ethereum of $350 to $100 either a fall of 70%.
It therefore remains 20% to resume for buyers, which seems to be complicated given the current market. the momentum (strength of buyers against strength of sellers) is still very bearish on a monthly basis and does not indicate, for the moment, any change in the situation.
Ethereum in weekly scale
Ethereum is also in the process of lose a significant level in this time scale. the support at $1,950 is giving way :
To do well, buyers would have to be able to resume support at $1,950. If this level is not maintained, we are open to an additional fall towards the next support located at $1,350. If so, Ethereum would lose 25% additional and altcoins would still suffer heavily from the fall.
The momentum is clearly bearish also in this unit of time. In early 2022, there was hope of resuming a bullish rally with bullish momentum. Today the RSI draws a new lowsign that sellers still control this asset. Moreover, as long as we remain below this downward trendline (black) the momentum remains globally bearish.
Ethereum is on a probable level of bounce. This level at $1,725 made it possible to rebound in May, June and July. It is not impossible that this level still plays its role. Moreover, the momentum RSI draws a potential divergence. It is not confirmed, for this it will be necessary that the RSI closes above 39.
A divergence does not mean that an asset has finished falling, but it does indicate a loss of strength. It would be positive to set up a range and try to change the bearish momentum on a daily basis.
Derivative Markets and Its Implications for Ethereum
The Binance Perpetual Contract
The perpetual contract of Binance is the contract that is most used by traders today, because it is the one that generates the most volume. It is then interesting to analyze this one.
Currently, it would seem that the actors are placed in long despite the recent drop. Looks like the actors are still trying to find the low point. Indeed, the funding is positivethe long/short ratio remains quite high and theopen interest continues to rise (position openings). These are not the conditions we like to see for a low to build.
Update on the liquidations of players in the derivatives markets
This market makes it possible to use theleverage. This leverage effect is possible thanks to a loan from exchange platforms. However, this loan is not without risk. When using this type of product, a point of liquidation executes below the entry price if we are long. The liquidation price is above the price if the actor is in shorts. The level directly depends on the leverage the actor uses.
Thanks to the bars that are represented on the graph, we can know if players are being liquidated or not. It is interesting to note that May 26 daily peak lower than May 9 as Ethereum price 23% lower. We can hypothesize that there are fewer and fewer players to liquidate.
Interestingly, there have been strong short sell-offs even as the May 25th candle is red. He is likely that many players are aggressively shorting Ethereum currently with high leverage.
Market sentiment study and on-chain analysis regarding Ethereum
Ethereum Market Sentiment Drops, But No Capitulation
It is not obligatory that the market seek with each fall a capitulation. On the other hand, the market sentiment of the players regarding Ethereum was very high a few days ago. With this fall, the feeling has gone down drastically :
We see it clearly, there is nothing to do with the surrender in March 2020. On May 16, sentiment was surprisingly very high and it took the price to fall by 15% for players to become bearish again.
Market sentiment is income to decent levels. Unless the market is looking for a capitulation, the conditions are in place for a possible rebound.
On-chain analysis: wallets with more than 10,000 ETH back in the accumulation phase
Here is a graph that shows the behavior of whales :
These addresses had distributed from August 2021 to March 2022. Since mid-March 2022, it looks like these players are starting to accumulate Ethereum again. This is an extremely positive point for the market. On the other hand, this period of accumulation can last several weeks or even several months without seeing any difference in the price.
Ethereum is currently losing significant levels. It is imperative that the price closes above $2,155 for the end of the month. On a weekly basis, Ethereum would need to rebound and close above $1,950. The derivatives show that there could be some long because the funding is positive and the open interest increases. On the other hand, it seems that there are fewer and fewer players to liquidate, a rebound could intervene to release some aggressive shorts. Market sentiment has finally returned to acceptable levels. Moreover, it would seem that the big players in the market (whales) are currently accumulating. We know that The Merge update should arrive in late 2022 or 2023, and it is possible that these players are accumulating for this highly anticipated event by the market.
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The article Ethereum: will the king of altcoins drop below the $1350 mark? appeared first on Journal du Coin.