These 5 Simple Factors Suggest Ethereum’s Rally is “Running on Fumes”

Bitcoin

Ethereum is currently attempting to rebound after plunging to lows of $350 earlier today. Although the initial reaction to this level was bullish, ETH has been unable to maintain its upwards momentum.

As such, the token may now be positioned to see further downside in the near-term. This may depend somewhat on Bitcoin, as it has been firmly guiding ETH and other major altcoins.

BTC is currently pushing up against its $11,000 resistance, which has proven to be insurmountable.

While speaking about Ethereum’s near-term outlook, one analyst pointed to five simple factors that suggest it may soon see a notable plunge lower.

Ethereum Struggles to Find Stability as Selling Pressure Ramps Up

At the time of writing, Ethereum is trading sideways at its current price of $355. This marks a slight decline from daily highs of $367, but a bounce from lows of $350.

The bounce from these lows at first was intense but has since lost its momentum. This could mean that further downside is imminent in the near-term.

This has been a historically important support level, so a break below this could spark an accelerated decline down towards the support between $315 and $325.

Here are Five Factors That Point to Underlying ETH Weakness 

To justify a bearish sentiment, one analyst recently pointed to five factors that he believes could mean downside is imminent for the cryptocurrency.

“I just can’t seem to shake the feeling that ETH has been running on fumes lately. Extremely accelerated DeFi coin market cycles. Kucoin hack. EMN hack. Tons of liquidity below. Stairstepping upwards PA (typically ends in elevator down). Yet, it holds/randomly rallies. Soon I think.”

Image Courtesy of Case_NL. Chart via TradingView.

The confluence of all these factors does indicate that the DeFi hype cycle that helped drive Ethereum to highs of $490 is rapidly coming to an end.

This could indicate that further downside is imminent for the cryptocurrency.

Featured image from Unsplash.
Charts from TradingView.
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