In our last Ethereum Price Analysis we said:
ETH looks bearish on all time frames, with a slight bounce or consolidation likely on the 4H chart. Daily and weekly look very bearish, and a retrace to lower support levels is likely in the coming weeks. This is in line with BTC and other traditional markets, which have all been suffering as the world attempts to rein in spiraling inflation. These next few months will likely be painful, but will present good buying opportunities along the way.
Keep in mind, our last ETH analysis was on May 6 when ETH was trading at around $2.7k. Since that time, ETH has traded down to a low of $1.7k, and is now consolidating around the $2k mark, proving our bearish prediction correct.
Let’s take a look at the charts for this week.
Ethereum Price Analysis
On our 4H chart, ETH’s price is testing the 50 SMA. So far, ETH has held above the 50 SMA for a few candles. If this level holds, the 50 SMA could act as a local support level – currently just over $2k. This would be the first sign of a short-term reversal / bounce. Resistance is expected at the 100 SMA – currently at $2.3k.
The RSI and Stochastic reveal a hidden bearish bias, as the RSI is slightly above neutral but Stochastic is showing signs of a soon reversal. A reversal here would take us back to lower support, near $1.8k.
Our daily moving averages are significantly above the price. A bounce on this timeframe would take us up to the 50 SMA, currently around $2.8k, which would act as resistance. Usually when the price is this far below the moving averages, a reversion to the mean is probable. Looking back at our chart, we can see that this is exactly what happened in the January of this year.
The daily RSI is about as oversold as it gets, and a move up in the Stochastic signals that a reversion to the mean is likely. In the mid-term, we are likely to see a bounce to the high $2k’s to test resistance.
The long-term weekly chart looks like a bottom will be found soon. RSI is nearing historic oversold levels, and the Stochastic appears to be bottoming out. We may have a couple weeks of consolidation and chop before a new uptrend is established. Be on the look out.
Ethereum Investor Sentiment
The ETH FGI is reading “fear” when the overall crypto FGI is in “extreme fear” and has been for weeks. This suggests that ETH maxi’s have not yet fully capitulated and may be in for more short-term pain before reversing.
Ethereum Fundamental Analysis
Fundamentally for Ethereum, not much has changed. Network usage has bottomed out, with transactions burning roughly 20% of ETH emissions.
Trent.Eth tweeted this week that the Merge is coming, inviting the community to an overview call of testnet upgrades on Friday, June 3. This leads many to believe that the much-anticipated Merge and move to Proof of Stake is on schedule for release this summer. In addition to moving the network to a Proof of Stake infrastructure, the Merge will reduce ETH network emissions by 90%, making the network deflationary even at its current level of usage. The fundamental shift in tokenomics is likely to create a sell-side liquidity crisis, sending the price of ETH up. It is also possible that it will be a “sell the news” event, and lead to a market dump of ETH in the short term, followed by a long-term fundamental driven bull run.
ETH looks bearish on the 4H, but bullish on the Daily and Weekly in the mid-term. This suggests short-term pain followed by long-term gain, reinforced by fearful (but not extremely fearful) investor sentiment. Fundamentally, ETH has bottomed – but the Merge could be a catalyst that sends ETH off on its next bull run in the coming months.
- $2k (local)
- $1.7-1.8k (range bottom)
- $2.3k (4h 100SMA)
- 2.8k (1D 50SMA)
Not investment advice. Do your own research.