- ETH’s selling pressure has subsided after the inauguration.
- But demand had yet to pick up; Is recovery possible?
Ethereum [ETH] struggled to keep up with Bitcoin in the second half of January.
Bitcoin actually [BTC] reached an all-time high of $109.5K, but ETH was still down almost 20% from its recent peak of $4.1K. However, the altcoin could be poised for a recovery amid renewed buying interest.
According to Joao Wedson, founder of on-chain analytics firm Alphractal, ETH’s selling pressure has subsided significantly, which could accelerate its recovery.
“Selling pressure in ETH has eased slightly, giving buyers an advantage in the short term. If buying pressure returns, it will rise quickly.”
Source: Alpharactal
The shared chart indicated ETH price action alongside the buying and selling pressure. On January 19, ETH experienced a pre-inauguration sell-off (red trough) but then declined (green peak).
This showed that sales were slowing, but there was no strong demand to push ETH higher.
Sentiment during EF’s restructuring
Away from the price charts, the Ethereum Foundation (EF), a non-profit organization designed to support ecosystem functions and activities, made headlines this week.
EF is under relentless pressure due to continued ETH dumps and a lack of transparency and direction.
However, Vitalik Buterin recently announced an overhaul of EF to suit the needs of the ecosystem. Some seemed dissatisfied with the planned changes.
According to Kyle Samani, founder of crypto VC firm Multicoin Capital, there was a ‘lack of urgency‘ by EF.
“There is still a complete lack of urgency, EF leadership is out of touch with the needs of its core constituents, and there is still no North Star”
That said, ETH users seemed optimistic about the altcoin’s prospects following EF changes, as evidenced by an uptick in positively weighted sentiment. This could increase the chances of recovery.
Source: Santiment
So is strong demand for ETH likely to drive the recovery? We checked the Coinbase Premium Index, a benchmark that tracks US investor interest in the altcoin.
At the time of writing, the indicator has moved from negative territory to neutral. Any further rise in the indicator could indicate increased demand in the US and would likely fuel the expected recovery.
Source: CryptoQuant
That said, ETH price action was below the major moving averages (MA), implying that a short-term bearish trend was still intact at the time of writing.
A rise above the MA could strengthen bullish conviction and put the $3.5K and $3.6K targets within reach. However, the $3K level could be tapped if bearish pressure continues.
Source: ETH/USDT, TradingView