Amid the ongoing bloodbath in the cryptocurrency market, Ethereum (ETH), the second-largest cryptocurrency by market capitalization, has not been spared. Over the past week, ETH has experienced a significant 9% price decline, bringing it down to the $3,130 level. 

As market participants closely monitor the situation, the focus now lies on crucial levels that must be held back to prevent a deeper retrace that could lead to substantial losses and heightened liquidation rates not witnessed in months.

Make-Or-Break Moment For Ethereum Price

Crypto analyst “Inspo Crypto” has drawn attention that Ethereum’s price has retraced to levels last seen at the beginning of May. 

According to the analyst, the upcoming 8-hour trading period, represented by a 1-day candle, will be a critical juncture to determine whether the bulls have capitulated or can muster a comeback. 

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A retracement above the abovementioned level could be considered a deviation from the bearish trend. However, if Ethereum fails to retest the lower trend channel at $3,170, it could pave the way for a further decline towards $2,700, consequently impacting altcoins and leading to significant losses across the market.

Upward Trajectory To $5,000 if Price Holds At $3,170

The analyst further asserts that, in his opinion, Ethereum has been operating within a new trend channel since October 2013. Hence, if ETH manages to hold its price within the range of $3,170  without breaking down, it would confirm an upward trajectory towards $5,000. It is important to note that this timeframe extends until the end of the year. 

Additionally, it should be considered that Ethereum is still operating within a long-term trend channel. 

If the described scenario unfolds, it would also confirm the long-term trend channel, indicating that ETH was trapped in a bearish phase between August 2023 and February 2024 and is now embarking towards $8,000 over the coming months. 

However, it is crucial to acknowledge that this analysis does not account for external factors such as monetary policy decisions or geopolitical conflicts. 

Nevertheless, if Ethereum manages to hold the $3,170 level and begins an upward ascent, the possibility of an altcoin season becomes increasingly feasible, as suggested by the analyst.

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Ultimately, ETH’s next moves will affect its trajectory and impact the broader crypto landscape, particularly the altcoin market, which has also seen significant losses in recent days. 

ETH trades at $3,130 at the time of writing, reflecting a 5% decline in the past 24 hours. As a result, it becomes crucial that the token closes above the aforementioned critical level of $3,170 in the coming hours to prevent potential additional losses, as emphasized by the analyst.

Featured image from DALL-E, chart from TradingView.com

Following Bitcoin and other top coins, Ethereum is in red, bleeding at spot rates. In summary, Ethereum is down 20% from the May 2024 highs, easily breaking $3,300, as the Bears target is $3,000 in the short term.

Ethereum Down But Analysts Are Bullish: Here’s Why

However, amid this deluge of sellers, some analysts remain defiant, expecting prices to recover in the coming sessions. Specifically, QCP analysts said there are reliable bullish signals to consider coming from the options market. Interestingly, the surge in bullish bets comes amid the imminent approval of spot Ethereum exchange-traded funds (ETFs).

QCP analysts observed that options for Ethereum expiring in September and December are still attracting significant interest. Options give holders the right to sell or buy the underlying asset on expiry. The fee to hold the options can be traded at a huge premium or discount, depending on market conditions.

With more traders placing calls and betting on increasing prices, more are confident that ETH will shake off the current weakness and rip higher in the coming days.

QCP also points to the positioning of liquidation clusters for Bitcoin and Ethereum. In technical analysis, these clusters refer to key price levels where many shorts will be liquidated, forcing them to buy at a lower price and triggering a short squeeze.

QCP says the liquidation clusters in the top two assets are “heavily skewed to the topside.” Any price surge could trigger a short squeeze, providing relief to ETH holders and potentially exciting opportunities for others.

Eyes On The US SEC And Spot ETH ETFs

Optimism is also high as the crypto market prepares for the first spot in the Ethereum exchange-traded fund (ETF). According to analysts, the product could go live in mid-July, following the approval of 194-b forms in late May.

Bloomberg ETF analyst Eric Balchunas notes that the United States Securities and Exchange Commission (SEC) has set July 8 as the deadline for issuers to finalize their S-1 forms.

Once spot Ethereum ETFs begin trading, Matt Hougan, the chief investment officer of Bitwise, thinks billions will be poured into the asset. In a memo to investors, the executive predicts a staggering $15 billion to find its way to ETH within the first 18 months.

Beyond this, Hougan said ETH will benefit from regulatory clarity, especially in the United States, and rising adoption of stablecoins.

Feature image from Canva, chart from TradingView

Ethereum (ETH) is experiencing a significant downturn, with its price rapidly approaching the crucial support level of $3,051. This sharp decline highlights increased selling pressure and growing bearish sentiment in the market. 

As Ethereum nears this critical threshold, traders are closely monitoring its behavior for signs of either a stabilization or a further drop. The $3,051 support level is now a focal point, determining the short-term direction of Ethereum’s price action and potentially setting the stage for future movements in the cryptocurrency market. 

This article aims to analyze the sharp decline affecting the digital asset and its impact on the cryptocurrency’s price as it approaches the $3,051 support level. It also seeks to provide traders and investors with a comprehensive understanding of the current situation, potential scenarios if the support level holds or breaks, and strategies for managing risk in this volatile environment.

ETH’s price is currently trading at around $3,181 and down by 5.05% with a market capitalization of over $382 billion and a trading volume of over $18 billion as of the time of writing. In the past 24 hours, there has been a decrease of 5.25% in ETH’s market capitalization and a 74.43% increase in trading volume.

Technical Indicators Pointing To A Decline For Ethereum

A technical analysis of ETH’s price action on the 4-hour chart reveals that the crypto asset is actively bearish and trading below the 100-day Simple Moving Average (SMA). Ethereum has been consistently bearish since after breaching the $3,360 mark and is currently heading toward the $3,051 support level.

Also, an analytical view of the 4-hour Composite Trend Oscillator shows that the price of ETH may continue its bearishness as both the signal line and the SMA of the indicator have dropped below 50% and are attempting a move into the oversold zone.

On the 1-day chart, the crypto asset has made a sharp drop below the 100-day SMA and is attempting a break below the bullish trend line while dropping toward the $3,051 support level.

Finally, on the 1-day chart, the composite trend oscillator indicates a further bearish move of ETH as the signal and the SMA of the indicator are both trending in the oversold zone.

What If $3,051 Support Fails?

Analyzing potential outcomes if Ethereum breaks through the $3,051 support level reveals that if the digital asset breaks below this level, it may move lower to test the $2,865 support level and probably move on to test the $2,160 support level and other levels below if the price breaches this level.

However, if the price of Ethereum faces rejection at the $3,051 support level, it will begin to ascend toward the $3,360 resistance level. Should the asset breach this level, it may continue to climb to test the $3,659 resistance level and possibly move on to test other higher levels if it breaches the $3,659 level.

Featured image from iStock, chart from Traadingview.com