As Ethereum (ETH) grapples with recent market turmoil and geopolitical tensions, analysts are closely monitoring the cryptocurrency’s trajectory, with some forecasting a potential drop to $2,500 in April. Despite the anticipation of a rally in tandem with Bitcoin during the upcoming halving event, lingering geopolitical uncertainties pose a significant threat to Ethereum stability.
Ethereum recently experienced a sharp decline of 15% within a week, breaching the crucial $3,000 support level in pursuit of fresh liquidity. The tumultuous geopolitical landscape, exacerbated by tensions in West Asia following Iran’s attack on Israel, has injected further uncertainty into the market, casting a shadow over ETH’s short-term prospects.
At its peak in April, Ethereum reached $3,725 before succumbing to the prevailing uncertainty. The impending decision by Israel on how to respond to the attack could trigger a broader downturn in risk assets, including cryptocurrencies, thus undermining the potential positive impact of the Bitcoin halving event.
Despite trading above $3,000, Ethereum faces significant resistance, with a minor uptick in trading volume to $22 billion indicating heightened interest among traders to short Ethereum. Moreover, the sustained downtrend has eroded Ethereum market capitalization, which currently stands at $366 billion, reflecting waning investor confidence amidst prevailing uncertainties.
Analyzing ETH’s Technical Structure Pre-Halving
While the Bitcoin halving event is primarily associated with Bitcoin, its ripple effects extend to the broader altcoin market, including Ethereum. Consequently, investors across retail and institutional sectors are advised to consider buying the dips as part of a strategic approach to capitalize on potential price surges akin to those witnessed in 2017 and 2021.
However, navigating the current correction presents significant challenges, with changes in Ethereum’s technical and fundamental structures complicating market dynamics. Blockchain data from IntoTheBlock highlights formidable new supply zones, with the seller congestion area ranging from $3,304 to $3,395, where 2.61 million addresses purchased 4.56 million Ethereum.
Despite weakened support areas, two regions stand out as potential buffers against selling pressure: the range between $2,846 and $2,937, and $2,664 and $2,755. Should Ethereum breach these support levels, further declines to $2,500 could materialize, signaling a deeper correction.
Ethereum Faces Oversold Conditions Amidst Escalating Selling Pressure
The Relative Strength Index (RSI) hovering at 35 underscores the intensifying selling pressure, while Ethereum technical support at $3,000 may offer temporary respite. However, sustained bearish sentiment could precipitate a drop towards $2,500, especially as Ethereum languishes below key bull market indicators, including the 20-day, 50-day, and 200-day Exponential Moving Averages (EMA).
In conclusion, as Ethereum navigates choppy waters amidst geopolitical uncertainty, investors must remain vigilant, with the potential for a drop to $2,500 looming large. While the Bitcoin halving event offers a glimmer of hope for a market-wide rally, prevailing headwinds underscore the importance of prudent risk management strategies in navigating volatile market conditions