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After two years of underperformance, Ethereum rose sharply from early 2024, regaining much of its previously lost value and cementing its position as the strongest altcoin in the market. However, corrections were inevitable, and historical data suggests that this is the general way the market works during growth cycles. Although the losses may seem detrimental from an outsider's perspective, they are vital to the well-being of the market and investors, as unlimited price growth is an unsustainable scenario. However, if consolidation takes place for a longer period of time, it can lead to losses.
Although the current cycle is not expected to be as problematic as its predecessors, investors and analysts are watching the Ethereum price chart and assume that it will take some time for the market to fully recover. This is precisely why a solid strategy that allows plenty of room for movement and change is of utmost importance.
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Resistance
Similar to the rest of the financial world, resistance level in the crypto ecosystem is the price zone where an asset faces significant selling pressure and is therefore prevented from rising beyond it. Historical data, pivot levels, and trend lines are some of the most common indicators that can help determine the support levels. At the moment, Ethereum is struggling with pressure around the $3,600 mark, which shows that there are still obstacles in the asset's path to success. Data and research suggest a resistance zone in this area as well.
The In/Out of the Money Around Price, commonly referred to as IOMAP, is an indicator that covers some of the key price clusters within 15% of the price in either direction. The measurements are designed to highlight the key sell and buy areas that should act as both resistance and support. The data collected by the IOMAP can also be used to make estimates about the current market. So far, the numbers suggest that the resistance area is somewhere between $3,534 and $3,639. That's a pretty wide range, given that roughly 1.7 million addresses hold about 4.97 million Ether coins.
Depending on whether this area sees high activity from sellers in the short term, the price is likely to fall further, start rising again or stagnate.
Bearish tendency
The Bitcoin halving in 2020 marked the beginning of one of the most intense crypto rallies in the entire history of the market. Although Ethereum and the altcoins operate as completely separate digital entities, they were nonetheless also affected by the changes and experienced tremendous growth throughout 2021. During this time, many crypto coins reached their all-time highs and the market performed better than it had in a very long time.
What followed in 2022 was a downward trend that matched the initial optimism and growth in all its magnitude, causing many coins to lose a significant portion of their value. From that moment on, investors focused on growth and development, hoping that the environment would recover quickly. Unfortunately, this was not the case, and even the market in 2023 was ultimately disappointing, causing more stagnation and uncertainty than growth.
The year 2024 also started strong, but is now going through a correction phase. On March 12, ETH reached a 27-month high of $4,093, a remarkable performance and a sign of a strong rally. The price then fell but was able to recover, signaling to investors and researchers that the current trading environment is much more robust and mature compared to previous ones. Nevertheless, most investors are convinced that the bullish tendency in the Ethereum environment has calmed down somewhat, at least for now.
The bearish trend is already visible on the daily chart, and there are signs that it will continue uninterrupted for a while, which is something that many investors are probably not particularly happy about. It is clear that some of them are also disappointed, considering that ETH managed to escape a similar market tendency only recently. Moreover, most investors believe that the current market is unlikely to bring the same destruction as the 2022 bear market, and most consider their assets and portfolios to be completely safe and sound.
The bulls are relying on the lower boundary support, which lies somewhere around $3,497. The RSI shows that the bears have been selling on the recent rally to $3,600. If the daily candle closes below the $3,497 mark, it will indicate a clear bearish breakout. As the crypto market remains volatile compared to its more traditional counterparts, it is not yet certain how the situation will unfold. That is why it is important for investors to be aware of the changes in the trading environment.
Further decentralization
Decentralization is the fundamental feature of the Ethereum space and the reason most investors flocked to crypto assets in the first place. Yet concerns about potential centralization have been at the top of the list of investor worries over the past year. Since the merger and Shanghai made staking and withdrawal a reality, investors have become increasingly concerned about the potential for centralization of the market.
While initial concerns included predictions that the amount of withdrawals would destabilize the market, the opposite has occurred and after an initial surge in withdrawals, investors began staking in record numbers. This has also reduced staking returns and led some to question whether some validators are not gaining an unfair advantage over other market participants. Recently, Vitalik Buterin published a blog post specifically addressing these concerns while also presenting a potential solution to the trading environment.
He proposed sanctioning validators based on their annual failure rate. If several of them fail together, they should receive a higher penalty than in a situation where they all fail independently. The idea here is that if one validator fails disproportionately, the mistakes they make could be propagated across all the different identities they are responsible for.
To sum up, the Ethereum market has performed much better this year, but the future remains uncertain in terms of consolidation. If you are an investorAvoid trading activities that seem too risky to you, as they can result in far greater losses than gains.
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