Ethereum Price: Will Support Hold or Break Below $2.8K?

Ethereum's price is currently testing a crucial support level amidst a broader downtrend. Despite the unsettling market conditions, there are signals indicating both potential rebounds and further downside movements.

Key Takeaways

Ethereum is testing the critical 0.786 Fibonacci retracement support level.
A failure to hold this support may lead to a further decline.
The cryptocurrency has seen a 50% drop from its all-time highs.
Current staking rate remains steady at 29.7%.
Market sentiment appears fearful, while on-chain behavior indicates underlying conviction.

Ethereum price chart testing key support zone

Ethereum Price Action Explained

Ethereum has recently experienced a decline from its peak and is currently at an important support level based on technical analysis. The 12-hour chart reveals that the price has dropped from its recent high and is now approaching the 0.786 Fibonacci retracement level. The cryptocurrency has been unable to breach a descending trendline, with the latest drop occurring right from this technical boundary.

If the 0.786 Fibonacci level fails to maintain its support, additional horizontal support can be expected at lower price levels. Notably, Ethereum has decreased by 50% from its highs, but the staking rate has remained consistent at 29.7%. This indicates that there’s no mass panic or exodus from individuals actively involved in the network.

Leon Waidmann, a crypto analyst, highlights the contrast in sentiment, stating:

“Price action says fear, on-chain behavior says conviction. This divergence tells you something. The marginal seller…”

Is Ethereum Approaching a Local Bottom?

On a daily timeframe, Ethereum has been trading sideways since the start of 2024, according to technical analysis. A breakout above the downtrend line, along with a formation of higher lows, could indicate a potential move back towards previous highs.

The Relative Strength Index (RSI) shows a downward trendline, and an upward break could correlate with rising prices. Meanwhile, Bitcoin is also facing uncertainty, experiencing declines alongside the wider cryptocurrency market as of December 1.

Entering long positions while the market sentiment is negative poses risks; however, some traders consider such conditions as buying opportunities. It’s important to remain cautious, as further declines are still possible. Traders are advised to use stop-loss orders near support levels for effective risk management.

Alternatively, waiting for a confirmation of a breakout above the descending trendline before entering positions might be a safer strategy. The Stochastic RSI indicators indicate oversold conditions based on the technical review.

Please remember that this analysis is for informational purposes only and does not constitute legal, tax, investment, financial, or other advice.