Ethereum's price has seen a slight 1.29% decline over the past 24 hours, dropping to $1,850.33. While this dip may seem insignificant for the second-largest cryptocurrency by market capitalization, there are some key takeaways from analyzing Ethereum's recent price action and market data:
Short-Term Momentum Slowing Down
In the past hour, Ethereum's price has dropped 0.09%, indicating slowing upward momentum after its surge to over $2,000 last week. This level around $1,850 appears to be acting as near-term resistance and traders seem hesitant to push the price higher in the short-term.
Lower Trading Volumes Could Lead to More Volatility
Daily trading volumes have dropped to around $4 billion, down significantly from over $10 billion per day last week. Lower volumes typically lead to higher volatility as there is less liquidity in the market. Any sudden spikes in volume from large trades could trigger larger price swings.
Bearish Technical Indicators Emerging
From a technical analysis standpoint, the short-term trend for Ethereum has turned bearish. The 50-day moving average has crossed below the 200-day MA, known as a "death cross" which is typically a bearish indicator. Additionally, the relative strength index (RSI) is below 50 indicating slowing upside momentum.
Macro Environment Still Favorable for Crypto
Despite the recent pullback, the macro backdrop still seems favorable for cryptocurrencies. Inflation remains high, interest rates are rising, and equities markets have been shaky, causing some investors to turn to crypto as an inflation hedge. However, this macro narrative could quickly change if global economic instability worsens.
Long-Term Uptrend Still Intact, Targeting $2,500
Zooming out to the weekly and monthly charts, Ethereum remains in a long-term uptrend despite the latest dip. It's up over 14% in the past 6 months and has strong support around $1,700. The next major upside price target remains around $2,500, which would require Ethereum to regain its bullish momentum. Patience may be warranted for long-term investors.
Should You Buy Ethereum During This Dip?
With Ethereum pulling back from its recent highs, crypto investors may be wondering if now is a good time to buy the dip. There are several factors to consider:
- Dollar cost averaging is often an effective long-term strategy rather than trying to time dips perfectly. Regularly accumulating crypto helps avoid overexposure if prices drop further.
- Consider your risk tolerance. The volatility of crypto may be uncomfortable for some investors compared to stocks. Make sure your position sizing reflects your appetite for risk.
- Zoom out and look at the big picture. Ethereum still has a promising long-term outlook due to its dominance in DeFi and NFTs. Short-term price swings shouldn't distract from the broader potential.
On balance, dollar cost averaging into Ethereum during this dip could prove rewarding over time for investors with a high risk tolerance. But avoid investing money you may need in the short term, as further declines are always possible.
Is Ethereum Still a Good Long-Term Investment?
Despite its recent volatility, several factors suggest Ethereum remains one of the most promising long-term crypto investments:
- Ethereum dominates decentralized finance and NFT markets, giving it "first mover" advantage in Web3. This leadership position is hard for competitors to overcome.
- Upcoming upgrades like the Merge to proof-of-stake should provide a tailwind by improving Ethereum's scalability, security, and energy efficiency.
- Developer activity in Ethereum is unmatched, with its smart contract capabilities enabling endless new applications and use cases to be built on its network.
- Institutional adoption of Ethereum is steadily increasing, bringing more mainstream credibility and investment into the ecosystem.
While short-term price fluctuations are inevitable, Ethereum still seems poised to be a core blockchain protocol and Web3 building block over the long term. For investors with multi-year time horizons, ETH remains one of the foremost crypto assets.