Ethereum On the Verge of Recovery as Price Steadies Above $2,200
May 24, 2021
Ethereum (ETH) appears to be on a path to recovery as it balances above the $2,200 level. Despite its 45% drop over the past seven days, reports show that more than 85% of all ETH HODLers are still in profits.
Over the past week, the network suffered a massive drop in transactions worth roughly $190 billion, as on-chain sentiment remains bearish. However, the recent inflow of capital into the Ethereum network indicates that recovery has begun.
Reports show that three key factors are supporting this recovery bias. Firstly, ETH longs were heavily overleveraged, which further exacerbated last week’s decline. However, ETH futures volume has remained under $70 billion since May 19, indicating that leveraged positions are low, lending support to a recovery bias.
Secondly, the daily volume of the Grayscale Ethereum Trust has dropped significantly. Historically, whenever this particular event occurs, it is usually followed by a massive rally. That said, as long as this metric remains consistent, the ensuing rally would be a sustainable one.
Finally, reports show that open interest in Ethereum has slumped since it peaked in the last week of April. As the social volume increases and ETH futures volume remains low, recovery is indeed imminent.
Key Ethereum Levels to Watch — May 24
Following an extensively bearish week, Ethereum appears to be on the verge of recovery from its over 60% dip from its recent all-time high ($4,370). The second-largest cryptocurrency has rebounded healthily from the $1,720 support, as bulls set their near-term focus on clearing the $2,400 resistance.
A break above the $2,400 level should reinstate a healthy amount of bullish bias for the cryptocurrency, as it would negate the prevailing descending channel.
However, a near-term decline from the current price ($2,270) should find support and rebound from the 50 SMA at the $2,200 support level.
Meanwhile, our resistance levels are $2,400, $2,480, and $2,570, and our support levels are $2,200, $2,100, and $2,000.
Total Market Capitalization: $1.51 trillion
Ethereum Market Capitalization: $264 billion
Ethereum Dominance: 17.4%
Market Rank: #2
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