3 metrics suggest that Ethereum (ETH) price correction is not over
After rallying to $4,091 leading up to Denkun's upgrade, Ether (ETH) underperformed both Bitcoin and the broader crypto market last month, prompting traders to question whether the altcoin slump is over.
To put this into context, the price of Bitcoin (BTC) fell by 18% during the same period, while the overall cryptocurrency market capitalization fell by 16%.
Several market and technical indicators may witness a deep correction before ETH starts a sustainable recovery.
The ETH/BTC ratio dropped in March.
Ether is up 8% so far in March but has underperformed bitcoin and other top layer 1 tokens. BTC's price has increased 21% in the past 30 days, while other high-cap Layer 1 tokens, such as BNB Chain's BNB and Solana's SOL, have increased 44% and 76% respectively in the same time frame.
The ETH/BTC ratio declined throughout March, reaching its lowest level since January.
Currently, there are a few reasons for ETH's underperformance in March, including Bitcoin-specific scenarios in 2024. US spot Bitcoin ETFs have been successful since they were approved by the Securities and Exchange Commission on January 11. Additionally, the coming halving of the Bitcoin supply, which has historically preceded the parabolic growth in crypto prices, has added to BTC's tailwind.
Moreover, there has been a decline in Ethereum network activity (by certain metrics) over the past week. According to Glassnode data, daily active addresses on Ethereum decreased from 622,963 addresses on March 20 to 546,484 on March 26.
Although Ethereum remains the network to beat in the Layer 1 sector, Solana has recently taken market share in this segment thanks to chain activity and stable coin transfer rates.
Related: Munnchables Hacker Returns 62.8M Ether Without Ransom
Ether faces strong resistance from above
Ether's recent attempt to recover from the $3,600 level was rejected by supply congestion. This is an indication that this area presents a stubborn obstacle in the way of ETH recovery.
The importance of this resistance zone is reinforced by data obtained by IntoTheBlock. The Out of Money Area Price (IOMAP) model shows that this area is in the $3,534 and $3,639 price range, with approximately 1.17 million addresses having previously purchased approximately 4.97 million ETH.
If this protection level sees a lot of movement from the sellers in the short term, the price of Ether is expected to go down.
The ethereal bear flag shows the continuation of the decline
After hitting a 27-month high of $4,093 on March 12, ETH prices have pulled back as bears took profits and the broader crypto market corrected. Since then, the price has returned to $3,511
Despite the recovery, a bearish flag can be seen on the daily chart, indicating the continuation of the downward trend.
Ether bulls are counting on support from the lower border of the flag at $3,497. A daily candlestick below this level indicates a decline from the chart formation to $3,060. Such a move represents a 26% drop from the current price.
The Relative Strength Index (RSI) position around 50 indicates that the bears will sell towards $3,600 in the final rally.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
