ETH selling pressure eased after inauguration.
However, demand has not increased yet; is there a chance of recovery?
Ethereum [ETH] struggled to keep up with Bitcoin in the second half of January.
In fact, Bitcoin [BTC] has hit a record high of $109.5K, but ETH is still down nearly 20% from its recent high of $4.1K. However, the altcoin could be poised for a recovery thanks to increased buying interest.
According to Joao Wedson, founder of on-chain analytics firm Alphractal, ETH selling pressure has decreased significantly, which could fuel its recovery.
“ETH selling pressure has eased slightly, giving buyers a short-term advantage. If buying pressure returns, the price will rise rapidly.”
Source: Alphractal
The chart shows ETH price action along with buying and selling pressure. On January 19, ETH experienced a pre-inauguration sell-off (red dot) but declined afterwards (green dot).
This shows that selling has decreased but there is no strong demand to push ETH price up.
Sentiment amid EF's overhaul
Price charts aside, this week the Ethereum Foundation (EF), a non-profit organization designed to support the ecosystem’s functions and operations, made headlines.
EF has been under constant pressure for ETH sales and lack of transparency and direction. However, Vitalik Buterin recently announced a restructuring of EF to align with the needs of the ecosystem. Some people are unhappy with the planned changes.
According to Kyle Samani, founder of crypto venture capital firm Multicoin Capital, EF has a ‘lack of urgency’.
“There is still a lack of urgency, EF leadership is out of touch with the needs of its core constituents, and there is still no North Star to guide the way.”
However, ETH users are optimistic about the altcoin's prospects following the EF changes, as revealed by the increase in positive sentiment weight. This could increase the chances of a recovery.
Source: Santiment
So, can strong demand for ETH fuel a recovery? We looked at the Coinbase Premium Index, an index that tracks US investors’ appetite for altcoins.
At the time of writing, the index has turned from negative to neutral. Any further improvement in the index could suggest increased demand from the US and potentially spark the much-awaited recovery.
Source: CryptoQuant
That said, ETH price action remains below key Moving Averages (MAs), suggesting that the short-term bearish trend remains in place at the time of writing.
A surge above the MA could strengthen the bullish sentiment and make the $3.5k and $3.6k targets within reach. However, the $3k level could be reached if the bearish pressure persists.
Source: ETH/USDT, TradingView
