The recent downturn of ETH has truly left many investors feeling dejected.
The latest report from Matrixport indicates that the global search interest for ETH has approached its historical low, which often foreshadows a further significant price decline. The reduced on-chain activity of ETH, the decline in Total Value Locked (TVL), as well as the market's speculation on the potential U.S. strategic digital asset reserve, have collectively led to a significant weakening in the demand for the native token of the ETH blockchain, ETH. The current market environment shows that the sluggish demand for ETH has become an undeniable fact.
However, there are still many staunch supporters of the ETH ecosystem in the industry. On March 3, ABCDE founder Du Jun publicly stated that although increasing his position in ETH over the past year has resulted in a paper loss of over $20 million, he still firmly believes in the value of ETH and is even considering selling other assets to lower the cost basis of his ETH holdings.
Nick Tomaino, the founder of the renowned investment firm 1confirmation, even stated directly on social media that they will "double down on ETH" because, in his view, ETH is one of the only two "trustworthy, neutral, and sufficiently decentralized" ecosystems in the crypto world, with a unique long-term "social scalability".
Facing the persistently gloomy market sentiment and the "bucking the trend" support from industry leaders, what is the outlook for ETH?
Historical Cycle Comparison: Repeat of the Script?
Some market observers point out that ETH's recent performance is similar to the bear market trends in 2018 and 2022. Anonymous trader 5.0 Inverted stated that ETH is "following the price trajectory of the bear markets in 2018 and 2022". The data in the chart shows that ETH fell 82.71% in 2018 and 68.29% in 2022, and continued to decline in the second half of those respective years.
Another trader pointed out that ETH had previously fallen 60% from $4,200 to $1,800 in the last cycle, and then rebounded strongly by 170% in the following months, ultimately reaching a new all-time high of $4,800. Drawing on the experience of 2021, ETH may continue to maintain its current weak performance before rebounding towards the end of the year.
Technical Analysis: Intertwined Bull and Bear Signals
As of the time of writing, ETH has rebounded from the low of below $2,000 to around $2,240, finding strong support around the $2,000 level, which is in line with the key ICT Optimal Trade Entry (OTE) level closely watched by traders, temporarily halting the downward momentum.
Looking at the hourly chart, the ETH price is showing mixed signals. After a brief break above the local resistance of $2,262, the price has started to retreat, and the bears may further push the price down in the short term.
The daily chart, however, conveys more positive information. ETH price has started to rebound after bouncing off the $2,076 support level. From a medium-term perspective, there are no clear reversal signals yet. Traders should focus on the critical $2,000 area. If it breaks below this level, the price may quickly test the $1,750 region.
Market analysts expect ETH to consolidate within the range of $2,000 to $2,500, and this range-bound fluctuation may persist until a breakout signal emerges, indicating the next major trend. Both bulls and bears are closely monitoring these key levels.
If ETH can maintain above $2,000 and accumulate momentum, the current stage may evolve into a new bullish wave. Chart analyst Ali Martinez believes that the critical resistance for ETH is at the $2,400 level, where 2.41 million investors have purchased 62.68 million ETH. For the analysts, breaking above this level could "pave the way for a $3,000 rebound".
CryptoQuant analyst MACD believes that ETH's MVRV ratio has fallen below 1, putting ETH in an undervalued territory. Historically, this level has often preceded significant price increases in previous bull market cycles. Furthermore, MACD points out that the number of ETH accumulation addresses (addresses that continuously receive ETH but have never withdrawn) has increased sharply, indicating that institutional investors are building their positions during the current market downturn.
However, MACD also acknowledges that the broader economic conditions, such as the liquidity and monetary policies in the U.S., may continue to exert downward pressure on asset prices, and the market sentiment has not yet fully turned optimistic. Investors need to remain cautious and wait for more definitive signals to be confirmed.
