Ethereum (ETH), the second-largest cryptocurrency by market cap, is flashing multiple bullish signals that suggest a potential upside move. However, rising exchange reserves are tempering this optimism.
Has Ethereum Formed A Local Bottom?
Ethereum has dropped nearly 20% over the past two weeks, falling from approximately $2,805 on February 23 to just above $2,200 at the time of writing. This decline has wiped out $80 billion from ETH’s market cap.
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Despite this sharp pullback, crypto analysts are pointing to several bullish indicators that could signal an impending price reversal. Crypto analyst Merlijn The Trader, for instance, has highlighted that ETH is following the Wyckoff Reaccumulation Pattern.
For those unfamiliar, the Wyckoff Reaccumulation Pattern is a technical analysis method developed by Richard Wyckoff. In the context of ETH’s current price action, this pattern suggests that the asset may be entering an accumulation phase before a potential upward movement.
The analyst further noted that the “spring phase” has just been triggered – indicating a possible bear trap where a brief dip below support levels misleads sellers, potentially setting the stage for a rally. A bounce from this level could see ETH climb to $4,000.
In a separate X post, Merlijn The Trader also pointed to a bullish divergence in Ethereum’s 4-hour chart. According to the analyst, ETH’s next immediate target is $2,700 before moving higher. Fellow crypto analyst CryptoGoos echoed these sentiments.
Beyond technical indicators, whale activity has added to the bullish sentiment surrounding ETH. In an X post, crypto analyst Ted noted:
Ethereum whale bought 17,855 ETH worth $36,000,000 at an average price of $2,054. Total holding $2,530,000,000 Ethereum. You think this is going down? Think again.
Rising Exchange Reserves May Spoil The Party
On the bearish side, crypto analyst Ali Martinez pointed out that ETH reserves on exchanges have been steadily rising. Over the past two weeks, more than 610,000 ETH has been transferred to exchanges, which could increase selling pressure.
Martinez’s analysis aligns with a recent report that found that despite ETH’s Relative Strength Index (RSI) being at a multi-year low, there could still be further downside in store for the digital currency.
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Indeed, ETH has been marred by significant bearish sentiment due to its relatively weak price performance over the past two years compared to cryptocurrencies like Bitcoin (BTC), Solana (SOL), and XRP.
However, extreme bearish sentiment could act as a contrarian signal, setting the stage for a surprise rally. At press time, ETH trades at $2,200, up 6% in the past 24 hours.
Featured image from Unsplash, charts from X and Tradingview.com
