Crucial Week for Ethereum: Understanding the Potential Drop Following $3,700 Peak

Ethereum (ETH) experienced a significant surge in July, with the price rising more than 60% from $2,400 to nearly $3,900. However, the bullish momentum seems to have slowed down, as the price behavior on a shorter time frame, such as the 4-hour chart, shows a loss of momentum.

The zone between $3,700 and $3,800 presents a difficult barrier for ETH's price to overcome due to technical resistance and selling pressure. The price of Ethereum reached $3,710 on August 4, but hours later, it retreated to $3,500.

For short-term investors, the scenario calls for caution due to bearish signals, technical resistance, and the possibility of a bull trap. The fear and greed index remains in neutral territory, reflecting a lack of clear conviction among market investors.

Market analyst Ali Martinez suggests that the next two key support levels for Ethereum would be $2,924 and $2,750. If Ethereum fails to strongly retake the $3,700 zone, the next strong support level is around $3,356. Breaking below this support level could accelerate the fall and confirm a short-term bearish scenario for Ethereum.

On the other hand, if Ethereum manages to stay above $3,500 and surpass $3,700 with increasing volume, it could retrace its path to $3,900 or even $4,000. The $3,880 level is identified as a high liquidity zone for Ethereum, which could potentially act as a springboard for a price rise.

The Ethereum Foundation has sold more than 25,000 ETH in recent months, which could contribute to the selling pressure. Additionally, there are over 460,000 ETH waiting to be withdrawn from staking, which could increase supply and further pressure the price.

The macroeconomic context adds complexity to the crypto market due to uncertainty about Federal Reserve interest rates and weak labor data. The market stopped being in a clear uptrend after the price's fall to approximately $3,500.

The price of Ethereum could retreat to $3,200 or lower if selling pressure persists and support gives way. However, the market remains sensitive to any change in institutional and regulatory narrative, as shown by the stability of Ethereum spot ETFs.

For those interested in learning more about the technical analysis of cryptocurrencies, the certified course at WIFI Wien offers a training programme taught by Dr. Günther Kornfellner, CFA, CAIA. This course provides an intermediate-level understanding of the subject.

In conclusion, while Ethereum has shown impressive growth in July, the current market conditions call for careful consideration for short-term investors. The potential for a bull trap, technical resistance, and bearish signals suggest a cautious approach is advisable.

Crucial Week for Ethereum: Understanding the Potential Drop Following $3,700 Peak