Ethereum, similar to most altcoins, is under significant selling pressure, struggling to shake off the weakness of early August. Even though there were flashes of strength after the climactic sell-off on August 5, prices are still below $2,800.
The only positive for now, at least looking at the daily chart, is the impressive bulls’ resilience. Despite the wave of lower lows, buyers have soaked in the deluge of selling pressure, holding prices above the $2,500 mark.
The bearish formation, nonetheless, remains, but one analyst thinks the rejection of lower prices below $2,500 is critical.
Ethereum Bulls Must Keep Prices Above $2,500
In a post on X, the analyst said that bulls must hold Ethereum above $2,500 for the uptrend to remain. The round number, looking at price evolution in the daily chart, marks the base of the bull flag.
In the past few trading days since the spike on August 8, Ethereum has been trending below the $2,700 and $2,800 resistance zones. At the same time, support remains clearly at $2,500. As price action consolidates, a bull flag has formed, signaling strength.
According to the analyst, if buyers keep $2,500 as their anchor, Ethereum is set to fly, reaching $3,150 in the next session. The recovery is welcomed, considering that the sell-off of August 1 through 5 was a bearish breakout formation. This sell-off breached the critical support zones of April to July 2024.
Impact Of Spot ETFs and Ecosystem Growth
The leg up, the analyst added, would likely be driven by inflow into spot Ethereum ETFs. Since approving spot ETFs in July, institutions have been keen to find exposure.
Taking to X, one ETF analyst notes that inflows now exceed $2 billion, excluding the outflows from Grayscale’s ETHE. During this period, BlackRock’s iShares Ethereum ETF has been driving demand.
Beyond the inflow from spot Ethereum ETFs, Vitalik Buterin thinks there has been positive progress that may prop up prices. Among these is the drop in gas fees in the mainnet and via layer-2 solutions like Base.
Moreover, the co-founder noted that decentralization efforts by Arbitrum and Optimism is massive. Arbitrum and Optimism recently announced their fault-proofs. However, Optimism reverted to a centralized fault-proof system after an audit report, allowing flaws to be fixed.
Feature image from DALLE, chart from TradingView
