Ethereum's Market Dominance: A Cautious Celebration
Ethereum Reclaims 10% Market Share: Proceed with Caution
Ethereum (ETH) has experienced a remarkable surge, exceeding 50% growth in May and outperforming the broader crypto market. This rally has propelled Ethereum's market dominance back above the crucial 10% mark for the first time since March. While this is positive news, several indicators suggest caution is warranted.
Overbought RSI Signals Potential Pullback
Ethereum's daily Relative Strength Index (RSI) has reached its most overbought levels since May 2021. Historically, such extreme RSI readings in ETH.D have preceded significant pullbacks. The current situation mirrors a similar pattern observed in early July 2024, where a comparable RSI peak was followed by a >17.5% drop in ETH's market dominance over the next 315 days. Furthermore, ETH.D remains below its 200-day exponential moving average (EMA), a key resistance level.
This suggests a potential decline towards the 50-day EMA support, around 8.24%, by June. This could indicate a shift in capital from Ethereum to other cryptocurrencies in the coming weeks.
Bearish Divergence Hints at 10-15% ETH Price Correction
A bearish divergence is forming on the four-hour ETH/USD chart. While the price continues to make higher highs, momentum indicators are trending lower. This divergence, as noted by crypto trader AlphaBTC, often signals trend exhaustion. Combined with key Fibonacci levels, a correction is anticipated.
Profit-taking could intensify, pushing the price towards support levels around $2,330 or $2,190—a potential 10-15% drop from current levels.
Buy the Dip Opportunity?
Despite the near-term bearish signals, some analysts, including Michaël van de Poppe, view a potential pullback as a "buy-the-dip" opportunity, predicting a subsequent rise above $3,500. Veteran trader Peter Brandt even forecasts a "moon shot" rally to over $3,800.
Disclaimer: This analysis does not constitute financial advice. Conduct thorough research before making any investment decisions. All investment and trading involve risk.
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