Ethereum’s downtrend was halted by buyers after falling to the $3,000 level, and the cryptocurrency is now trading above $3,400. Analysts say this level is likely a local bottom and further declines are unlikely. Four key reasons underpin this bullish view:
1. Declining ETH holdings on exchanges: Ethereum holdings on exchanges have fallen to their lowest levels in 9 years, meaning supply for immediate sale is limited.
2. Network Fee Increase: Ethereum network fees reached $9.23 million last week, up 83% from the previous week. The high fees are a sign of high demand and market strength for Ethereum, preventing further price declines.
3. Short-term traders' losses: The Spent Output Profit Ratio (SOPR) index reached 0.96, indicating that many have sold at a loss in this correction, a condition that usually occurs before prices rebound.
4. Strong technical support: The $3,000 to $3,150 range is supported by long-term moving averages.
These factors have kept Ethereum above the support floor and increased the likelihood of the next bullish wave starting, however, analysts warn that a short-term swing to around $2,800 is still likely.
