In the recent rally, Ethereum has followed Bitcoin’s lead. As a result, the digital asset has again broken through the $3,000 barrier for the year. This point, which has proven elusive for the cryptocurrency, has continued to be a source of difficulty for it. Historically, ETHEREUM has struggled to stay above this level. This is the case this time, as it fails to secure a position above $3K.

Ethereum is in Decline

Ethereum, like all other cryptocurrencies, is a highly volatile asset with volatile price fluctuations. It has fluctuated in recent months but has mostly remained in the $2,600 to $2,800 range. It finally broke out of this trend and began a new one with the recent rally, which saw it rise above the coveted $3K level.

Nonetheless, this recovery would be short-lived because ETH would not maintain this position. The digital asset could not form any meaningful support above the $3,000 level due to fierce bear resistance. This meant that the price fell below it, but it would be a continuing downward trend given the current indicators.

The digital asset was trading below its 50-day moving average as it fell below $3,000. Given the high volatility of cryptocurrencies in general, this is a critical point. Buyers are unwilling to purchase the digital asset at the prices seen in recent weeks, indicating that Ethereum is still a seller’s market. As a result, it is expected that the market will continue to fall as more coins are dumped on it.

This, however, does not spell bad news all around though. A market like ETH’s can quickly switch up and turn into a buyer’s market, especially when prices are as low as they are right now. Ethereum could see another 10% bounce if this occurs, firmly establishing its position above the $3k resistance level.

Market Sentiment Falls to Fear

The Fear & Greed Index had moved out of the fear territory back into a neutral point at the start of the week, but this new wave of positive sentiment did not hold. The index has now moved back into fear at a current score of 39 at the time of writing, showing that investor sentiments are still more damaging than anything despite recent rallies.

Ethereum and the crypto market are directly affected by investor sentiment, as they show when investors are likely to put money in the market. Currently, with the index in fear, investors are very wary of putting money in the market. However, this does not necessarily spell bad news for ETH.

Usually, when most investors are fearful, it can present a good buying opportunity. Whales have been known to take advantage of moments like these to fill their bags in the past. If so, then ETH can kickstart another rally. But only a significant absorption of current supply can start the digital asset on this path.

Dips in ETH Are Limited?

A break underneath the $2,960 support level could push the price down to the $2,850 support level. The next significant support is near $2,800 and the 100 hourly simple moving average. It is close to the 50% Fib retracement level of the most recent wave from the $2,559 swing low to the $3,042 high. Good luck!