Ethereum Price Analysis: ETH Drops After Failing At The $1,365 Resistance Barrier
Daily Ethereum ETH Price Forecast
- Ethereum price has previously found repeated support at the 20-day SMA.
- The 4-hour ETH chart has formed a double top with the $1,435 resistance line.
Between January 22 and 24, the Ethereum price rose from $1,110 to $1,390, flipping the 20-day SMA from resistance to support in the process. Since then, the price attempted to break past the $1,435 resistance and failed.
Ethereum Price Consolidates Below $1,365
As things stand, ETH has attempted to break past the $1,365 resistance barrier multiple times but seems to have failed to do so. Currently, the Ethereum price seems to be consolidating below this particular level. The relative strength index (RSI) is trending along the edge of the overbought zone. A further bullish movement could make the asset overvalued and welcome another bearish correction.
Image: ETH/USD daily
However, if another bearish correction does happen, it could push the Ethereum price down to the $1,300 support line. As per IntoTheBlock’s IOMAP, previously, 113,000 addresses had purchased 6.88 million ETH tokens at this level.
Upon observing the 4-hour Ethereum price chart, we can see that the $1,435 resistance barrier has been a formidable one for the bulls. This line had forced the price to form a double top pattern in this timeframe. The MACD shows sustained bearish momentum, which the parabolic SAR has reversed from positive to negative. Both these indicators tell us that the current market sentiment is bearish.
Image: ETH/USD 4-hour
Coinbase: Institutions Starting To Pour Money Into Ethereum
Coinbase recently said that institutions are starting to spend large amounts of capital on Ether (ETH), the second-largest cryptocurrency by market cap. In a recent overview of 2020, Coinbase noted that Bitcoin remains the favourite among institutional entities, but substantial capital is being directed to ETH.
An excerpt reads:
While our institutional clients predominantly bought Bitcoin in 2020, a growing number also took positions in Ethereum, the second-largest crypto asset by market capitalization. Ethereum performed well against USD in 2020, outpacing Bitcoin to finish the year up 487% at $745.
The review points to Ethereum’s many issues as an ongoing challenge. The exchange noted that scaling friction, surging transaction fees, and increased attack surface with complex smart contracts were obstacles.
Ethereum’s programmability brings new challenges and risks, but also incredible potential. Obvious issues with applications currently using Ethereum include i) scaling friction, i.e. how to improve throughput on-chain when frequent transmission of data is required; ii) relatedly, high costs associated with transaction fees (‘gas’ fees) when the network becomes congested; and iii) an increased attack surface with complex smart contracts, which can grow to hold large stockpiles of crypto assets and thus attract bad actors.
The report also highlights the potential for the smart contract blockchain to play a significant role in the future of finance.
The potential benefits of applications built on Ethereum, however, are significant. In 2020 Ethereum developer and investment activity in decentralized finance (‘DeFi’) grew, as did use of Ethereum-based stablecoins such as Tether and USDC.
The popular exchange also said that it had crossed a new milestone in the number of users on its platform. Currently, it has 43 million customers across the world and holds more than $90 billion in digital assets.
Ethereum Price Is Expected To Hit These Levels
If our negative thesis holds, the Ethereum price may drop to the $1,300 support wall. However, this line is robust enough to absorb a lot of selling pressure. A further break below can take ETH to the 20-day SMA ($1,245).