Ethereum Loses Energy After Hitting $3.9K Mark

Olumide Adesina•Friday, December 6, 2024•2 min read

Ethereum’s celebration is considerably less frantic to XRP, Bitcoin, and Solana, as the price has yet to surpass its 2021 high. However, $4,000 should arrive very soon.

Ethereum has paused in its upward trajectory after an impressive rise above the $3.8K resistance level. The subsequent drop in bullish momentum led to a period of consolidation, even though this breakout was a significant turning point.

The market eventually recovered to above the $3.9K mark. This pullback produced a slight rebound, indicates the market’s intention to continue its upward movement, and has reignited interest in buying.

The bearish divergence of the RSI indicator, suggests that the bullish momentum is waning. It also implies that there might likely be a mid-term consolidation correction phase in Ethereum before it resumes its rise. The price should experience periods of reduced volatility and retracements as it approaches the psychological resistance of $4K.

The price has bullish momentum with an RSI above the bullish mark, continue on this path, it will be necessary to surpass the last high at 79. The next resistance, equivalent to the March highs, is around $4,100.

ETH is the second-biggest cryptocurrency globally in market valuation but is still far behind Bitcoin. The difference might, however, begin to close as ETH continues to outperform BTC. Even though Satoshi Nakamoto’s creation performs better annually than Vitalik Buterin, the situation has flipped over the past 30 days.

The open interest metric, which counts open perpetual futures positions across all exchanges, has reached a new all-time high. This spike suggests unprecedented speculative activity in Ethereum’s derivatives market.

Interestingly, this increase in open interest is occurring without Ethereum’s price hitting a new all-time high. This divergence raises concerns about high volatility and large liquidation cascades. In the event of a significant price contraction or consolidation, the Futures market’s overleveraged positions could trigger a wave of forced liquidations, leading to more declines.

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ABOUT THE AUTHOR See More

Olumide Adesina

Financial Market Writer

Olumide Adesina is a French-born Nigerian financial writer. He tracks, analyzes, and reports changes in financial markets with over 15 years of working experience in investment trading.