Negative sentiment is gradually growing in the general crypto market once again, with major digital assets like Ethereum, the second-largest cryptocurrency, witnessing a notable setback that led to a slowdown of its renewed upside price momentum. Due to the sudden drop, several crypto analysts believe that the altcoin could face an extended bearish movement shortly.

Ethereum Set To Enter A Correction Phase

IC News, an informative platform has delved into Ethereum’s current price action, offering an insightful perspective about its performance in the near term. After a thorough examination, the platform highlighted that ETH might be on the brink of a temporary corrective phase as market momentum cools off following recent gains. The platform’s prediction is due to signs of overbought conditions and profit-taking by retail and institutional investors, which could affect the stability of the crypto asset’s value.

According to IC News, Ethereum is currently getting close to a critical resistance area at the $3,600 price level, where there is a lot of supply and room for profit-taking. Given how robust this resistance level is, the platform claims there is a good chance that a brief period of correction could occur soon to limit buying pressure.

Furthermore, IC News points out that in order to create a more stable uptrend for Ethereum, the market will have to fall back toward the 200-day Moving Average (MA). 

While the analysis might spark worries about the altcoin‘s short-term trajectory, the pullback may turn out to be healthy for the asset. This is because the altcoin may create new strong support levels during the correction phase and fortify its base for future price expansion. It could also present several buy signals and opportunities for new and seasoned investors, allowing them to reassess their positions in light of waning market sentiment.

Despite the sudden price decline, the digital asset persistently demonstrates bullish potential in the broader outlook, with market expert and trader, Captain Faibik predicting a mid-term price target for Ethereum at the $5,450 level.

Thus far, Ethereum continues to move within the Broadening Wedge pattern, a key indication of rising momentum. Meanwhile, Captain Faibik anticipates a breakout from the bullish formation in the coming days, which will trigger another huge rally for ETH, potentially to $5,450 in the mid-term.

ETH Now Ahead Of America’s Banking Giant

Ethereum’s recent upswing has led the altcoin to crucial milestones in the last few days, such as surpassing financial behemoth Bank of America by market capitalization. On Sunday, ETH saw a surge in its overall market cap by over 5%, bringing it to a total of $383 billion and breaking past the market cap of Bank of America by a whopping $40 billion.

IC News stated that the crypto asset’s high valuation in comparison to Bank of America reflects a change in the dynamics of the traditional sector as blockchain technology adoption and growth start to outpace traditional banking systems.

Featured image from Unsplash, chart from Tradingview.com

On-chain data shows metrics related to network activity have spiked for Ethereum recently, something that could pave way for a further rally.

Ethereum Transaction Volume & Whale Transfer Count Have Spiked Recently

According to data from the on-chain analytics firm Santiment, Ethereum has seen an uplift in two activity-related metrics. The indicators in question are the Transaction Volume and the Whale Transaction Count.

The first of these, the “Transaction Volume,” keeps track of the total amount of the cryptocurrency (in USD) that users on the ETH network are shifting across the network with their transactions.

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When the value of this metric is high, it means the ETH blockchain is processing the transfer of a large number of coins right now. Such a trend suggests the investors actively invest in asset trading.

On the other hand, the low indicator implies the interest in the cryptocurrency may currently be low as the holders are only moving around a low amount of ETH.

Now, here is a chart that shows the trend in the Transaction Volume for Ethereum over the last few months:

As displayed in the above graph, the Ethereum Transaction Volume has registered a sharp surge recently, implying interest in the asset has increased alongside the price rally.

This could be considered a constructive development for the cryptocurrency, as an increasing network activity is generally required for rallies to be sustainable.

In the past, some price moves have kicked off sharply, but the Transaction Volume didn’t register much of an increase at the same time. Such moves generally died out before long.

The chart also contains the data for the other metric of relevance here, the “Whale Transaction Count.” This indicator measures the total amount of ETH transfers valued at more than $100,000.

Transactions of this scale are assumed to be coming from the whale entities, so the Whale Transaction Count reflects the activity level of the big-money investors.

From the graph, it’s apparent that this indicator has also spiked for Ethereum recently, which implies that the recent increase in the volume isn’t just a sign of interest from the smaller investors but also the humongous hands.

Naturally, it’s impossible to say based off these indicators alone, whether the investors are buying or selling, as all types of transactions look the same from their view. Because ETH has seen a sharp rally recently, this activity has probably been for accumulation so far.

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The analytics firm explains,

Expect any growth from Bitcoin, during this bull run, to see profits redistribute into Ethereum and potentially push it toward its own all-time high while its network activity looks very healthy.

ETH Price

After observing a surge of more than 27% over the last seven days, Ethereum has broken beyond the $3,150 level.

Featured image from Dall-E, Santiment.net, chart from TradingView.com