Despite challenges, key indicators signal a potential Ethereum rally.
Ethereum Faces Market Pressure
Ethereum (ETH), the second-largest cryptocurrency, has struggled this month, trading around $3,310 on January 22, approximately 20% below its November highs. Competing networks like Bitcoin, Solana, and Ripple have outperformed Ethereum, retesting their all-time highs.
ETH’s Declining Market Share
ETH’s challenges include declining market share. Platforms like Solana’s Raydium and Orca processed $123 billion in volume over the past week, dwarfing ETH’s $26 billion. Additionally, Jito overtook Ethereum in fee revenue, generating $157 million compared to ETH’s $112 million.
Further pressure comes from the Ethereum Foundation’s token sales and rising ETH exchange balances, which have climbed from 15.3 million ETH on January 1 to 15.8 million, according to CoinGlass.
Positive Indicators for ETH Rebound
Despite these hurdles, ETH shows signs of a potential recovery:
- Spot Ethereum ETF Inflows: Institutional interest remains strong, with cumulative inflows reaching $2.74 billion over the past five days.
- Leverage Ratio Surge: Ethereum’s leverage ratio has climbed to 0.6, a significant rise from 0.24 in September 2023. Historically, such divergence between leverage ratio and price suggests bullish potential.
- Futures Open Interest: Ethereum’s futures open interest has increased to $30.3 billion, up from $20 billion in December, signaling heightened market activity.
Technical Analysis: Signs of a Bullish Breakout
Ethereum’s price chart reveals a cup-and-handle pattern, with the handle forming a falling wedge—a bullish indicator. ETH remains above the 200-day Exponential Moving Average, strengthening the case for a breakout.
If Ethereum surpasses the $4,000 resistance, it could achieve a 21% gain from its current level.
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