Why Ethereum is Poised for a Pullback Following Sharp Rejection at $320
Ethereum has been caught within the throes of an intense uptrend throughout the past few days, with its price exploding from recent lows of $230 to highs of over $312 that were set earlier today.
This parabolic price rise has sent the cryptocurrency surging past the heavy resistance levels that it was previously facing.
It appears that this growth has been driven by a combination of strong fundamentals, multiple bullish narratives, and a strong market structure.
The confluence of these factors may continue boosting its price action over a macro time frame. Still, in the short-term, some analysts are expecting it to see a deep pullback – especially against its Bitcoin trading pair.
Ethereum Shows Signs of Strength, But Analysts Still Expect a Pullback
At the time of writing, Ethereum is trading up over 2% at its current price of $312. The cryptocurrency has been flashing some intense signs of strength throughout the past few days.
Less than one week ago, ETH was trading at the lower end of its macro trading range between $230 and $250. Its price action grew to be highly correlated with BTC, and many altcoins significantly outperformed it.
This trend shifted roughly three days ago when its price saw a sudden spike up to $265. From this point on, it has been grinding higher and just set fresh 2020 highs of $320 overnight.
Despite the selling pressure here being quite intense, the crypto’s bulls have since defended against any far-reaching downtrend.
It now appears that Ethereum is positioned to see further strength, as long as the entire crypto market remains in a firm uptrend.
It may not be able to outperform Bitcoin for too much longer, however, as one analyst is noting that it could decline from its current price of 0.0313 BTC to lows of 0.025 BTC.
“ETHBTC – Pullback areas I would like to add to on spot holding,” he said while pointing to the chart seen below.
Image Courtesy of TraderXO. Chart via TradingView.
Fundamental Strength Backs Latest ETH Uptrend
Ethereum’s latest uptrend appears to have been driven by robust fundamentals as well, as the cryptocurrency’s price has been growing in tandem with a rapid rise in the number of wallets interacting with the network.
Analytics platform Santiment spoke about this in a recent tweet, also putting forth a chart showing the massive rise in daily active addresses and network growth seen since it plummeted to the sub-$100 region in March.
“ETH has crossed above $300 for the first time since July 9, 2019. There are a plethora of fundamental explanations, but none more indicative than the rapid rise in addresses interacting on the network, and the rate of new addresses now being created.”
Image Courtesy of Santiment.
This fundamental growth does indicate that this ongoing rally may be far more sustainable than those seen in years past.
Featured image from Unplash. Charts via TradingView.
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Cole Petersen, Khareem Sudlow