Ethereum Price Forecast: The Reasons It Could Drop to $3k This Week
This month, the price of Ethereum has surged during the last ten days, approaching the crucial resistance level at $4,000. Since April, when it was at its lowest, it has increased by more than 170%.
The continued demand from Wall Street investors has caused the price of Ethereum to rise, pushing the net inflow to around $8 billion today. Given how difficult it was for these ETFs to surpass $5 billion for months, this is a significant development.
The price of Ethereum has increased due to its dominance in the majority of crypto-related industries, including stablecoins, real-world asset tokenization, and decentralized finance (DeFi). Its DeFi network has a 66% domination with over $185 billion in total value locked.
More than $130 billion worth of Ethereum’s stablecoins are now available, far more than those of other chains like Tron, Solana, and BSC. In the RWA sector, it also holds a sizable market share. Compared to ZKsync Era, which has more than $2.3 billion, its RWA assets have increased to over $7.2 billion.
The price of ETH is also skyrocketing as interest in the Fusaka upgrade grows. The goal of Fusaka’s November debut is to improve scalability on layer-2 networks such as Base, Optimism, and Arbitrum. The Pectra improvement that enhanced its staking will be built upon.
Ethereum Price Technical Analysis
As bulls try to reach the crucial resistance level around $4,000, the price of Ethereum has risen from a low of $1,375 on April 9 to $3,860 today, according to the daily timeframe.
However, there are a few reasons why the coin might be about to drop back to $3.00 this week. First, the price of Ethereum has become extremely overbought, as the following chart illustrates, with the Relative Strength Index (RSI) reaching its highest level of the year at 87.
The stochastic oscillator is extremely overbought, having risen to about 100. This also applies to other measures such as the Commodity Channel Index and the Money Flow Index (MFI).
Furthermore, the coin will likely crash due to a phenomenon known as mean reversion. In this case, after a notable divergence, an asset frequently returns to its historical averages. In this instance, the price of Ethereum is $3,700, whereas the 200-day and 50-day moving averages are $2,570 and $2,800, respectively.
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