Ethereum is up 10% since last Friday, marking a notable rally as the crypto market responds to local demand levels. Despite this rally, ETH has lagged Bitcoin and other altcoins in recent months.

However, key data from Santiment highlights an increase in network activity, suggesting a potential shift in Ethereum’s performance. While ETH still faces challenges in reclaiming the crucial $2,500 zone, this period of volatility could present a strategic opportunity.

Investors may want to view this moment as an opportunity to position themselves for expected future gains. With the current momentum and increasing network engagement, Ethereum’s rally could be in sight, presenting a promising prospect for those ready to capitalize on the rebound.

Ethereum Network Growth: A Sign of Relief

Ethereum has been struggling lately, with traders and investors waiting for confirmation that the worst of the selling pressure and negative sentiment is over. One positive sign is the increased network activity reported by Santiment on X, which could be a sign of improving conditions.

126.21K new ETH wallets created on Sunday.
126.21K new ETH wallets were created on Sunday. | Source: Holy

On Sunday, a day typically known for lower trading volumes, Ethereum saw a significant spike in network growth. The number of new wallets created reached a four-month high, with 126,210 new wallets added. This increase in network utility indicates growing interest in Ethereum and may signal a shift in market sentiment.

To maintain this momentum, Ethereum price must pursue and test higher levels, especially in the local supply zone, which is around $2,550. This price level will be crucial for Ethereum to regain momentum and establish a solid uptrend.

Investors and traders are closely monitoring further signs of strength as the broader market enters a consolidation phase. Increased network activity could be an early indicator of a potential rally, making it essential to keep an eye on Ethereum’s price movements and overall market trends.

ETH price development

Ethereum is trading at $2,349, following a 10% rebound from yearly lows of $2,150. The surge comes after weeks of sustained selling pressure, leaving ETH at a crucial level in its price action.

The focus now shifts to the 4-hour 200 exponential moving average (EMA) at $2,576. To maintain its bullish momentum, Ethereum must not only break above this key technical level but also close convincingly above it.

ETH is trading below the 4H 200 EMA.
ETH is trading below the 4H 200 EMA. | Source: ETHUSDT chart on Trade view

Since late July, ETH has struggled to maintain a position above this EMA, a key resistance point. The inability to close above the EMA during this period has highlighted a bearish trend in the short term. A successful breakout and close above this level could signal a potential trend reversal and could mark the beginning of a more sustained upward move.

However, the situation could worsen if Ethereum fails to hold its current price levels and drops below $2,349. A drop below this support could lead to a deeper correction, possibly reaching yearly lows or even lower levels again in the short term. Such a scenario could negatively impact ETH holders and lead to increased volatility and risk.

It is crucial to keep a close eye on ETH’s interaction with the 200 EMA and its ability to sustain above current levels so that we can assess its near-term outlook and possible trend shifts.

Main image of Dall-E, chart from TradingView

By newadx4

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