Ethereum’s price experienced a modest dip on Tuesday, trading around $4,134, as broader macroeconomic concerns tempered gains despite robust underlying growth in its scaling solutions and on-chain activity. The digital asset posted a 0.77% decline over the past 24 hours, following a period of strong rebound.
The cryptocurrency, which boasts a market capitalization of $495.61 billion, saw its daily trading volume surge to $67.93 billion, a 59.35% increase above its 30-day average. This high volume during a correction typically signals active trading, with some market participants absorbing sell-offs.
A key factor supporting Ethereum’s fundamentals is the demonstrated resilience of its Layer-2 scaling solutions, such as Mantle. These technologies have shown stronger performance during recent market rallies, notably outperforming the broader crypto relief rally after a significant $19 billion crash. Layer-2s reduce transaction costs and accelerate processing, which has attracted increased user volume.
On-chain metrics underscore this underlying strength, with daily transactions holding steady at 1.2 million. The number of active Ethereum holders also saw a weekly increase of 2%, reaching 500,000. Furthermore, the Total Value Locked (TVL) in decentralized finance (DeFi) applications on Ethereum stands at $120 billion.
Despite these positive fundamental indicators, the immediate price action suggests a period of caution. Ethereum’s current price remains below its 7-day Simple Moving Average (SMA-7) of $4,157.99, indicating short-term bearish momentum. The 14-day Relative Strength Index (RSI) is at 45, hovering in neutral-bearish territory.
Futures market data also points to a reduction in investor leverage. Open interest in Ethereum futures declined by 5% to $25 billion, with funding rates remaining neutral at 0.01%. This suggests traders are pulling back on highly leveraged positions.
Technical analysis indicates key support at $3,896. A breach of this level could trigger a further 10% price decline. Resistance levels are identified around $4,200, near the 15-day SMA, and $4,300, aligning with the 30-day SMA.
Market sentiment on social media platforms remains mixed. Approximately 60% of discussions on platforms like X lean bullish due to the recent rebound. However, concerns about implied volatility in options, currently at 65% annually, contribute to fear, uncertainty, and doubt (FUD) among investors.
Institutional interest in Ethereum continues, with verified publications highlighting inflows and optimism post-market corrections. This includes mentions of partnerships, such as those with BlackRock, potentially driving inflows into Ethereum-related exchange-traded funds (ETFs).
The broader market outlook, however, remains intertwined with macroeconomic conditions. Risks include pending regulatory developments and Ethereum’s significant correlation with indices like the S&P 500 and the U.S. Dollar Index (DXY).