Ethereum Technical Analysis: ETH bulls hit full stop near $650 psychological level
Daily Ethereum ETH Price Analysis
- $650 resistance hindering Ethereum’s move to $750.
- MACD in the 4-hour time frame shows increasing bearish momentum.
Ethereum bounced up from the 20-day SMA but seemed to have stalled at the $650 resistance. However, if they somehow overcome this level, they should aim for the $750 psychological level. Let’s take a more in-depth look.
Ethereum to face a short-term correction?
After stalling at the $650 resistance line, the smart contract platform leader has been trending horizontally for a while. This uninspiring move by the bulls does indicate that ETH could be on the verge of a short-term correction.
Image: ETH/USD daily chart
Looking at IntoTheBlock’s IOMAP, we can see that $650 is a powerful psychological level which is holding the price down. Any break above this zone takes ETH up to $750. On the downside, we can see that the price is sitting on top of healthy support at $625.
Previously, at $625 (which coincides with the 50-bar SMA in the 4-hour chart), 121,000 addresses had purchased around 6.35 million ETH. This is good news because this zone looks capable enough to absorb a humongous amount of selling pressure.
If the price breaks below this level, the next healthy support zone of note is at the 20-day SMA ($600). This level needs to hold strong to keep the price above $600.
Image: ETH/USD 4-hour chart
The 4-hour chart also adds further credence to this bearish outlook as it shows that the market momentum is getting progressively more bearish (MACD). However, despite all this, Ethereum appears to be backed by solid fundamentals. It looks like DeFi is dominating 90% of ETH’s transactions, which is a positive sign.
DeFi dominates Ethereum transactions
According to a recent report titled “2020 Dapp Industry Report,” decentralized applications (dApps) saw a boom in popularity this year. In 2020, “the top 10 DeFi dApps are responsible for 87% of Ethereum transaction volumes, or $223 billion in 2020,” the report noted.
Furthermore, DappRadar revealed that “95% of transaction volume growth belongs to Ethereum DeFi dapps”. DeFi is now the “dominant sector in terms of key metrics such as TVL (total value locked), AUW, and volume”. At the beginning of 2020, DeFi dApps accounted for less than $1 billion in total locked value. That number surged to $16.5 billion in less than a year.
According to DapRadar’s 2020 Industry Overview, the number of new DeFi Dapps skyrocketed this year. In 2019, only eight new DeFi Dapps emerged across the entire blockchain ecosystem. In 2020, 238 DApps were created. Of those, 106 exist on the Ethereum network. Interestingly, the percentage of DeFi Dapps built on Ethereum did not drastically change (50% of Dapps were on Ethereum in 2019 and 45% in 2020). However, the volume increased by almost 30 times the amount year over year.
Key price levels to watch for ETH
The 20-bar SMA in the 4-hour chart ($625) is absolutely critical. If the price somehow breaks below this zone, the next support level of note is at the 20-day SMA ($600). The buyers will somehow want to break past the $650 resistance to reach $750.