Ethereum will face appreciable resistance on the trail to additional progress
After two years of underperformance, Ethereum soared from the very beginning of 2024, regaining much of its previously lost value and consolidating its position as the most powerful altcoin on the market. However, corrections were inevitable, with historical data indicating that this is the general way the market operates during growth cycles. Although the losses may seem damaging from an outside perspective, they are vital to the well-being of the market and investors, as indefinite price increases constitute an unsustainable scenario. However, if consolidation takes place over a prolonged period, it may result in losses.
Although the current cycle is not expected to be as difficult as previous ones, investors and analysts are nevertheless closely monitoring developments. Ethereum Price Chart and believe it will take some time for the market to fully recover. This is precisely why it is essential to have a solid strategy that leaves plenty of room for movement and change.
Resistance
Just like in the rest of the financial world, the resistance level in the crypto ecosystem is the price zone in which an asset is under considerable selling pressure and is therefore prevented from climbing above it. Historical data, pivot levels, and trendlines are some of the most common indicators that can help determine support levels. Currently, Ethereum is facing pressure around the $3,600 level, showing that there are still obstacles on the asset’s path to success. Data and research also point to an area of resistance in this area.
Money Inflow/Outflow Around Price, commonly referred to as IOMAP, is an indicator that covers some of the most relevant price groups within 15% of price in either direction. The metrics aim to show key selling and buying areas that should act as both resistance and support. Data collected from IOMAP can also be used to make estimates about the current market. The numbers so far indicate that the resistance zone is between $3,534 and $3,639. This is a fairly large area, with around 1.7 million addresses holding around 4.97 million Ether coins.
Depending on whether this area sees a high volume of activity from sellers in the short term, the price should fall further, start to rise again, or stagnate.
Downtrend
The 2020 Bitcoin halving marked the start of one of the most intense crypto rallies in market history. Although Ethereum and altcoins operate as entirely separate digital entities, they were nevertheless also affected by the changes and saw considerable growth throughout 2021. During this period, many crypto coins reached their all-time highs and the market performed better than it had been. done for a very long time.
What followed in 2022 was a downward trend that matched the initial optimism and growth in terms of magnitude, causing many coins to lose a considerable portion of their value. Following this moment, investors have focused on growth and development, hoping that the environment will recover quickly. Unfortunately, this was not the case, and even the 2023 market ended up being disappointing, causing more stagnation and uncertainty than growth.
The year 2024 also got off to a strong start but is now experiencing an episode of correction. On March 12, ETH reached a 27-month high of $4,093, a considerable performance and a sign of a strong rally. The price then fell but managed to recover, signaling to investors and researchers that the current trading environment is considerably more robust and mature than the one that preceded it. Nonetheless, most investors are convinced that the bullish trend has calmed down a bit in the Ethereum environment, at least for now.
The downtrend has already appeared on the daily chart, and it appears that it will continue undisturbed for a little longer, which is probably not of interest to many investors. It is clear that some of them are also disappointed, considering that ETH only recently managed to escape a similar market trend. Additionally, most investors believe that the current market is unlikely to bring the same destruction as the 2022 bear market, and most consider their assets and portfolios to be completely safe.
The bulls are leaning on the lower boundary support, somewhere around $3,497. The RSI shows that the bears were selling at $3,600 during the last rally. If the daily candlestick closes below the $3,497 level, it will indicate a clear bearish breakout. Given that the crypto market remains volatile compared to its more traditional peers, it is not yet clear how the situation will evolve, hence why it is essential that investors remain aware of the changes occurring in the business environment.
Continued decentralization
Decentralization is the fundamental characteristic of the Ethereum space, the reason why most investors have flocked to crypto assets. Still, concerns about possible centralization have loomed large among investors’ worries over the past year. Since the merger and Shanghai made staking and staking a reality, investors have become increasingly concerned about its potential for market centralization.
While initial concerns centered around predictions that the amount of withdrawals would destabilize the market, the opposite happened, and after an initial surge in withdrawals, investors began bidding in record numbers. This has also reduced staking yield and has led some to question whether some validators have an unfair advantage over other users on the market. Recently, Vitalik Buterin published a blog post specifically addressing these concerns while also introducing the business environment to a potential solution.
He suggested imposing penalties on validators based on their annual failure rate, and if several of them fail together, they should receive a higher penalty compared to a situation in which they all fail independently. The idea here is that if a validator is disproportionate, the mistakes they make could be replicated across all the different identities they are in charge of.
In summary, the Ethereum market is performing much better this year, but the future still remains uncertain regarding consolidation. If you are an investorAvoid any trading activity that seems too risky, as it can result in far more losses than gains.
