As the sun rose on the global crypto market, Ethereum, the world’s second-largest cryptocurrency by market capitalization, was in an upward correction mode. After a period of bearish rally, Ethereum has entered a correction phase, with the price moving towards $1,900. As Ethereum faces a market correction, the focus is on the bulls’ ability to prevent further price declines. This phase could potentially pave the way for Ethereum to break the $2,000 mark.
Traders are bullish on Ethereum
CryptoQuant data reveals a correlation between Ethereum price movements and trading volumes on decentralized exchanges (DEX). Since January, there has been a surge in ETH transactions on DEX platforms. In March, when the SEC approved centralized exchanges, DEX trading volumes peaked, coinciding with an increase in the ETH price.
However, DEX volumes have declined since then, possibly indicating a bearish trend. While there is a correlation, it does not imply direct causation as other factors also affect the price of ETH.
Despite various influences, traders remain positive on ETH, as evidenced by the declining put-to-call ratio. This ratio, a measure of options trading, indicates bullish market sentiment when it is declining.
It compares the number of put options, which are bearish bets, to call options, which are bullish bets. A lower put-to-call ratio suggests fewer traders are betting against ETH, indicating a more optimistic market outlook.
Another factor contributing to traders’ bullish behavior could be decreasing implied volatility. A drop in implied volatility suggests that traders expect less market uncertainty and less price volatility, often interpreted as a sign of reduced risk and a more stable market.
What’s next after $1,900?
The extended wick on the Ethereum candlestick indicates that buyers bought heavily near the $1,800 dip. ETH price has made a remarkable increase and is currently trying to break above the EMA100 on the 4-hour price chart. However, bulls strongly defend an increase as a breakout above $1,900 will see a spike in short liquidation. At the time of writing, ETH price is trading at $1,871, up more than 0.4% from yesterday’s price.
The flattened moving averages and relative strength index (RSI) near the centerline suggest a balance between supply and demand. If the ETH price moves above $1,927, bulls will once again exert buying pressure to send the price towards $1,975, where bears can put up a strong fight.
On the downside, a serious downturn could be on the horizon if ETH price fails to maintain momentum above the critical USD 1,820 support line. A drop below this level will bolster the confidence of short holders, and the ETH price could bottom out near $1,650-$1,700.