Negative sentiment is once again gradually growing in the overall cryptocurrency market, with major digital assets such as the second-largest cryptocurrency Ethereum experiencing a notable setback, causing its new upward momentum to slow down. Due to the sudden drop, several crypto analysts believe that altcoins may soon face a long-term bearish trend.
Ethereum is about to enter a correction phase
IC News, an information platform, has delved into Ethereum’s current price action, providing insightful insights into its short-term performance. After a thorough inspection, the platform highlighted that ETH could be on the verge of a temporary correction phase as market momentum cools after recent gains. The platform’s prediction is due to signs of overbought conditions and profit-taking by both retail and institutional investors, which could affect the stability of the crypto asset’s value.
According to IC News, Ethereum is currently approaching a critical resistance area at the $3,600 price level, where there is a lot of room for supply and profit-taking. Given how strong this resistance level is, the platform claims that there is a high probability that a short-term correction will soon occur to limit buying pressure.
Additionally, IC News noted that in order to create a more stable uptrend for Ethereum, the market would have to fall back to the 200-day moving average (MA).
While the analysis may raise concerns about the altcoin’s short-term trajectory, a pullback could be healthy for the asset. This is because the altcoin is likely to create new strong support levels during the correction phase and consolidate its base for future price expansion. It may also provide some buy signals and opportunities for both new and experienced investors to re-evaluate their positions based on weakening market sentiment.
Despite the sudden price drop, the digital asset continues to show bullish potential in the broader outlook, with market expert and trader Captain Faibik predicting a medium-term price target of $5,450 for Ethereum.
So far, Ethereum continues to move within the Broadening Wedge pattern, which is a key indicator of rising momentum. Meanwhile, Captain Faibik expects a breakout of the bullish pattern in the coming days, which will trigger another major rally in ETH that could reach $5,450 in the medium-term.
ETH now ahead of US banking giants
Ethereum’s recent rally has led to the altcoin achieving key milestones over the past few days, such as surpassing financial giant Bank of America in market cap. On Sunday, ETH’s overall market cap surged by more than 5%, bringing its total market cap to $383 billion, surpassing Bank of America’s market cap by $40 billion.
IC News said the crypto asset’s high valuation compared to U.S. banks reflects changing dynamics in traditional industries as the adoption and growth of blockchain technology begins to outpace traditional banking systems.
