The situation in the crypto market has been difficult since the end of August. However, there are more and more reasons to expect a local upward trend in cryptocurrencies on the market. And there is no doubt that ETH will be one of the main beneficiaries of the bullish move.
The main reason for the likely upward movement of the crypto market is the start of a protracted correction of the US dollar index. In addition, there were rumors on the financial markets about a possible curtailment of the Fed's aggressive policy. Market players attribute this to the European crisis and the bankruptcy of Credit Suisse.
If the combination of these factors works, then the cryptocurrency and Ethereum market is waiting for a local upward trend and a gradual fading of the liquidity crisis. For the main altcoin, this is especially good in light of recent negative events.
Negative background around Ethereum
Recently, an article was released where the future of Ethereum is being questioned after the Merge update. The authors believe that the growing number of competitors and the parallel increase in the number of ETH fork are diverting significant investment from the altcoin.
After the merge, the centralization of Ethereum and the percentage of transaction censorship also increased. Due to the decrease in trading activity, the deflationary mechanism of ETH also does not work properly. All this leads to a decrease in investment in the main altcoin and its gradual extinction.
There is some truth in the study, but it is incorrect to say that ETH has reached its peak and is moving to the bottom. Even aside from the liquidity issues due to the crypto winter, there are other factors pointing to Ethereum's potential. The Merge update was only 55% complete and there are several important updates ahead of the altcoin before all the algorithms work as they should.
In addition, the approaching bullish momentum will show how Ethereum is ready for growth. Over the past day, the asset has risen in price by 4% and as of October 4, the altcoin is trading around $1,350. The coin managed to gain a foothold above $1,320, which allowed it to build on the bullish success.
In the next two days, ETH/USD will begin to consolidate above the $1,350 level for further movement towards $1,430. Most likely, there will be a local rebound here due to high sales volumes. Everything will depend on the trading activity in the asset network and its dynamics in the coming days.
Ethereum on-chain activity showed a powerful surge following the results of yesterday's trading day. As of October 4, address activity and transaction volumes are below average. At the same time, technical metrics continue to grow, which indicates a dangerous divergence for growth.
While the on-chain numbers are declining, the RSI and stochastic on the daily timeframe maintain a strong upward trend. If on-chain metrics do not show a growing interest in Ethereum after the opening of the US markets, then the growth of ETH will be unjustified.
It is also important to note that a "triangle" pattern is forming on the daily chart. In a bearish scenario, a breakout of the pattern will bring the price down to the $1,2000–$1,250 area. If buying activity recovers to yesterday's volumes, the price will continue to move towards $1,430.
Ethereum is showing bullish signals that do not correlate with buying activity. This is fraught with a further decline and a retest of $1,200. At the same time, the general situation is conducive to growth, therefore, even in the event of a local price drop, ETH will resume bullish movement at least to the range of $1,530–$1,670.
Relevance up to 09:00 2022-10-05 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.