Ethereum (ETH) is showing signs of a possible price reversal as a bullish divergence has emerged on the daily timeframe. This development marks the first bullish divergence for ETH in over two years, signaling a potential shift in market momentum.
Crypto analyst Michaël van de Poppe recently highlighted this trend, stating,
“These are great signs on the markets, as $ETH has made its first bullish divergence in the daily timeframe in more than two years.”
However, he also raised an important question:
“Will this be the actual reversal signal?”
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Technical Indicators Point to Potential Price Movement
At the time of reporting, Ethereum was trading at $2,514.53, reflecting a 0.89% decline over the past 24 hours and a 4.94% drop in the last week. Despite this downturn, technical indicators suggest a potential change in the trend.
The Bollinger Bands, a technical analysis tool used to predict market volatility, are narrowing, which often indicates that a significant price movement could be forthcoming. Ethereum was trading below the middle Bollinger Band, suggesting that it remains under bearish momentum.
The Moving Average Convergence Divergence (MACD) indicator showed that the MACD line remained below the signal line, both trending in negative territory. This indicates ongoing bearish pressure. However, the MACD histogram revealed a slight weakening, which could hint at the early stages of a potential reversal or consolidation.
Meanwhile, the Relative Strength Index (RSI) was at 39.7 at press time, placing Ethereum in oversold territory. This suggests that while selling pressure is still present, there may be opportunities for buyers to re-enter the market, potentially leading to a short-term price bounce.
Macroeconomic Factors and Their Potential Impact on Ethereum
Macroeconomic factors could also influence Ethereum's price trajectory. The Federal Reserve is anticipated to cut interest rates in September and may continue to do so due to slowing inflation and economic uncertainty.
A reduction in interest rates generally makes riskier assets, such as cryptocurrencies, more attractive, as it reduces the appeal of safe-haven assets like the U.S. dollar. Historically, rate cuts have resulted in increased capital inflows into the crypto market as investors seek higher returns in alternative assets.
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Ethereum, with its established ecosystem and growing adoption, could benefit significantly from this shift in investor sentiment. A dovish stance from the Federal Reserve could weaken the U.S. dollar, providing additional upward pressure on ETH's price.
Positive Growth Indicators for Ethereum
On-chain data further supports a positive outlook for Ethereum. According to DefiLlama, the Total Value Locked (TVL) in Ethereum-based decentralized finance (DeFi) protocols stood at $46.966 billion at press time. The network also recorded a 24-hour transaction volume of $1.13 billion, with inflows amounting to $2.44 million.
The number of active addresses over the last 24 hours was 390,291, with 64,793 new addresses, indicating continued user engagement and network activity. This sustained interest in the Ethereum network could provide support for the asset's price in the coming months.
