Is Ethereum at Risk of Reversing to $2,500? Price Analysis

Ethereum’s value has undergone a 6.83% decline within the past 24 hours, dropping from $2,770 on August 14. Market data reveals that the bearish pressures from short traders have outweighed the positive impact of the dovish US Consumer Price Index (CPI).

At the onset of August, Ethereum faced uncertainty, but its price saw a consistent upward trend over the past week, largely influenced by Grayscale, an investment firm based in the US. The announcement of new cryptocurrency trusts for SUI, TAO, and MKR on August 5 ignited market demand and investor optimism, signaling a deeper institutional acceptance of cryptocurrencies. This positive sentiment spilled over to Ethereum, propelling its price up by 30% between August 5 and August 14.

However, the release of the dovish US CPI data on August 14 altered the market dynamics. Investor attention shifted to the stock markets, triggering a notable drop in cryptocurrency prices. Within a day, Ethereum’s price plummeted by 6%, erasing a significant portion of its recent gains. The resulting chart illustrates Ethereum’s stumble, with concerns arising about a potential sharp correction in the near future.

The market’s response indicates a potential increase in bearish pressure on Ethereum, with derivatives markets hinting at further downside risks.

The initial positivity following the CPI data was short-lived as bearish sentiment took hold in Ethereum’s derivatives markets. The Taker Buy/Sell Ratio, a key indicator measuring the ratio of buy orders to sell orders, dropped notably from 1.07 on August 8 to 0.94 by August 14.

This decline signifies a growing bearish sentiment among derivatives traders, with sell orders surpassing buy orders, signaling a bearish market trend. Despite the dovish CPI, traders remain cautious about Ethereum’s short-term future, suggesting that the recent rally may not be sustainable. With bearish sentiment prevailing in derivatives markets, Ethereum’s price could potentially dip to $2,500 in the coming days.

Currently, Ethereum’s price struggles to maintain its recent gains, with technical indicators pointing towards a potential reversal. The Donchian Channel indicator indicates strong resistance around $2,770, with the price finding it challenging to surpass this level. On the downside, support is evident around $2,500, with indications of a potential deeper correction. The Average Directional Index (ADR) further reinforces this bearish outlook, suggesting a possible $2,500 reversal for Ethereum.

In summary, Ethereum’s recent surge seems to be losing momentum, with bearish sentiments in derivatives markets and technical indicators hinting at a likely correction. Should the bears maintain control, Ethereum could experience a significant decline towards $2,500 in the short term.