Ethereum (ETH) retests a key Resistance Line, Path Back to $3k?

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Ethereum started 2022 on the wrong foot, the worst start of the year in two years. As of writing, there are indicators of general apprehensiveness even though prices are several folds up from 2019 lows. Currently, ETH prices are firm above $2.5k and bulls are likely to post even more gains if fundamentals lead.

Central Banks’ Hawkishness Crashed Crypto Markets

Thus far, central banks’ shift of monetary policies from dovish to hawkish state to attack the ravaging effects of inflation is why assets are dumping. Like stocks and indices, the cryptocurrency market bore the brunt of bears as leading crypto assets like ETH dropped from their all-time highs.

Ethereum crashed from $4.9k to below $2.3k in January 2022, compounding fears that the bear market was starting. Nonetheless, the recovery of the past few days could revive demand, even pushing the coin back above $3k.

Ethereum losing DeFi Market Share

Despite general optimism, Ethereum is losing its share on DeFi to emerging projects. Trackers indicate that the network’s share of DeFi slumped to all-time lows of 57 percent in January and currently stands at around 59 percent.

Concerns around scalability leading to high transaction fees could explain why other platforms are gaining ground. Still, the Ethereum brand and the deployment from cheaper layer-2 solutions could speed up in 2022, drawing more users back to the platform, subsequently supporting ETH prices.

Ethereum Price Analysis

ethereum price analysis february 2

Ethereum prices are gradually climbing up the ladder as per events in the daily chart.

After finding support from around the psychological support at $2.5k, ETH bulls are now retesting the middle BB—a flexible resistance line.

If bulls muster enough momentum to close above this line, the odds of ETH rallying back to $3k– in the process unwinding losses of January 21 and 22– will be high, triggering demand. At spot rates, aggressive traders may load the dips provided prices trend above $2.5k targeting $3k.

Meanwhile, risk-on traders may find opportunities above $3k—in continuation of the bullish run of early H2 2021—or below $2.3k in confirmation of the November and December 2021 losses.

Technical charts courtesy of Trading View

Disclaimer: Opinions expressed are not investment advice. Do your research.

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