Ethereum Price Forecast: ETH continues to trade in the red

Ethereum (ETH) price continues to trade in the red for the third consecutive day on Wednesday after being rejected at the $2,700 level on Monday, News.az reports citing FXStreet .

Though the average fees dropping below $2 may boost network usage, traders should remain cautious as Coinbase Premium Index data indicates weak institutional demand.

Ethereum fees fall below $2, boosting prospects for increased network usage

Santiment’s data shows that Ethereum's average fees reach $1.63 on Tuesday, an affordable level that historically has encouraged traders to increase their transfer frequency.

Historical data shows that when the ETH average fee drops below $2, the utility and usage of the ETH network increase, which could lead to a rally in Ethereum's price. Moreover, as stated in the previous article, the chances of a short squeeze could also drive ETH higher.

CryptoQuant’s Ethereum Coinbase Premium Index shows signs of weakness and remains below neutral levels. This indicator measures the price gap between Coinbase Pro (USD pair) and Binance (USDT pair), and it serves as a key metric for assessing the behavior of large-wallet investors as it reflects whale accumulation trends. This is significant because Coinbase Pro is a primary gateway for institutional cryptocurrency purchases.

In the case of Ethereum, the metric currently stands at -0.075, below its neutral level of zero. It has been constantly declining since early October. If this downward trend persists or increases, it could increase selling pressure for Ethereum.

Ethereum Price Forecast: Retesting 50-day EMA
Ethereum faced resistance around its descending trendline (drawn by joining multiple highs from the end of May) on Monday and declined 4.5% until Tuesday. As of Wednesday, it continues its decline, retesting its 50-day Exponential Moving Average (EMA) at $2,564.

If ETH breaks and closes below the 50-day EMA, it could decline further to retest its daily support level of around $2,461.

The Relative Strength Index (RSI) indicator trades at 51 and points downwards on the daily chart after rejection around its overbought level of 70 on Sunday. This indicates a weakness in bullish momentum. If RSI continues to decline and closes below its neutral level of 50, it could lead to a sharp decline in Ethereum price.

News.Az