Key Takeaways
- Ethereum has formed a bull flag, suggesting the pullback may be temporary and a bullish continuation could follow.
- On-chain data shows the MVRV Long/Short Difference has risen to -20.74%, suggesting ETH may have bottomed.
- The 4-hour chart also shows a bull flag, with support above $2,321, reinforcing the idea that a deep drop is unlikely.
Ethereum’s (ETH) price has dropped below the $2,500 mark once more, marking its lowest point in the last three months. This downturn comes weeks after the altcoin again showed signs of pushing toward $3,000.
While the drop may raise short-term concerns, indicators suggest this is likely a temporary setback. In this analysis, CCN examines the current ETH trend and why a potential recovery could be close.
Ethereum to Resist Bearish Pressure
According to the daily chart, Ethereum’s price has formed a bull flag after the drop below $2,500. The bull flag appears following ETH’s rally from $1,802 to $2,689 between May 7 and 13.
This upswing formed the flagpole. However, ETH has been consolidating between $2,473 and $2,678 since that swing high to create the flag. Typically, trading volume has to increase for the cryptocurrency to validate the bullish pattern.
You’ll Want To See This
But as of this writing, ETH has yet to see a notable surge in trading volume, with CoinMarketCap data showing that it has been over $13 billion in the last 24 hours.
Due to the current volume, Ethereum’s price might not see a quick breakout yet. At the same time, it is unlikely to slide below the flag’s lower trendline.
If this trend continues, ETH’s price might keep consolidating in the short term until bulls add pressure and help it surge past the overhead resistance.
Furthermore, CCN’s analysis shows that the Money Flow Index (MFI) has not dropped below the signal line. This indicates that bears have not seized full control of ETH’s price movement.
With buying pressure still present, the probability of a rebound remains strong. If sustained, Ethereum is more likely to trend upward than face an extended decline.
Bottom In, Correction Over
From an on-chain perspective, the Market Value to Realized Value (MVRV) Long/Short Difference supports the bullish thesis. This metric gauges whether long-term holders are sitting on more unrealized profits than short-term holders.
A positive reading implies that long-term holders are profitable, signaling that the asset is approaching a market top. However, a negative value suggests short-term holders are in profit, indicating more room for upward price movement.
In Ethereum’s case, the MVRV Long/Short Difference has climbed from -43.49% to -20.74% in recent weeks. This implies that ETH’s price may have already bottomed, with short-term holders beginning to realize gains.
If the metric continues rising and flips positive, it could pave the way for a sustained price recovery.
ETH Price Analysis: Bulls Still in the Game
The 4-hour chart setup appears similar to the daily timeframe, as a bull flag formation is also visible. Currently, Ethereum’s price is not trading near the lower boundary of this flag, suggesting that a drop below $2,321 is unlikely for now.
Supporting this outlook is the Chaikin Money Flow (CMF), which remains above the zero line—a sign that bullish momentum is still in play. If this buying pressure persists, ETH could break above the immediate resistance at $2,720.
In such a scenario, the next target for the cryptocurrency could be around $3,028.
However, if the CMF flips below the zero line, bearish pressure might increase, potentially pushing ETH below the $2,321 support. If that breakdown occurs, the price could decline further toward $2,000.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
Was this Article helpful?
