Ethereum commenced Friday’s trading on a slightly positive note, opening at $2,631, but the optimism quickly faded as the price slipped below the key $2,600 support level. However, after dipping $2,513, the asset staged a modest rebound.
Despite showing brief signs of recovery, fresh selling activity has taken hold, suggesting that Ethereum could face further downside in the near term.
Onchain data highlights that traders are moving capital out of the Ethereum network as confidence weakens. DeFiLlama reports that more than 18 million ETH has been withdrawn from the ecosystem, indicating that investors are becoming increasingly wary.
Furthermore, Dex’s volumes have declined sharply over the past 24 hours, indicating reduced trading activity and weaker market manipulation. The decline in liquidity further supports the bearish sentiment.
Interestingly, even with the ongoing negative momentum, Ethereum’s Total Value Locked (TVL) has shown a slight increase. It could imply that some investors are locking in their assets for staking rather than trading, suggesting a long-term approach in anticipation of future growth.
Indicators Signal Possible Dip Below $2,400
In the derivative market, data from CryptoQuant reveal increased selling interest. A surge in short positions alongside a 4% drop in open interest highlights the growing cautiousness among traders.
However, the exchange reserve levels continue to decrease, indicating that more investors are withdrawing their ETH from centralized platforms. While typically considered a bullish signal, in the current context, it may indicate a preference for cold storage or staking over active trading.
Technical indicators support the possibility of further price declines. The Relative Strength Index (RSI) has declined from 64 to 57, indicating a weakening in buying momentum.
Similarly, the Average Directional Index (ADX) is trending lower, indicating a reduced trend despite brief recoveries. MACD remains negative and continues to issue sell signals.
Ethereum has also fallen below the 61.8% Fibonacci retracement level. It now increases the likelihood of a move toward the 50% level at approximately $2,379. A potential rebound could occur near $2,440, but only if buying interest intensifies.
If the current conditions persist, the asset could retest the second pivot support at $2,284, especially after failing to break through its third resistance level earlier in the day.
While specific metrics, including a decrease in exchange reserves and a slight increase in TVL, provide tentative support, the prevailing trend remains negative. For now, sentiment remains cautious as Ethereum navigates a period of elevated volatility.
Ethereum Classic Mirrors Market Weakness
The bearish trend extends beyond Ethereum. Ethereum Classic (ETC) recorded one of its steepest declines in recent weeks, falling from $18.20 to $16.80.
Indicators for ETC, including the RSI and ADX, continue to trend downwards, which means that further losses may be likely. The asset risks falling below $16, with the next support level identified close to $15.60.
