Amid the surge in the cryptocurrency market, driven by Bitcoin [BTC] inching closer to its previous all-time high, Ethereum [ETH] recorded a weekly increase of almost 10%. Currently, the altcoin is valued at $2.6k.
This trend signifies a common trading tactic where major altcoins flourish when Bitcoin faces a significant resistance level, prompting individual investors to redistribute their investments to manage risks.
In contrast to earlier cycles, ETH has been in a consolidation phase for the last three days while Bitcoin has been registering daily gains of more than 2% during the same period.
In summary, there appears to be a notable shift in the dynamics of the market.
Memecoins Emerge as Key Beneficiaries
Over the past week, memecoins have experienced significant surges in value, with three meme tokens among the top five gainers.
Notably, DOGE led this trend with an impressive 30% increase within the week – indicating a growing investor confidence in high-risk assets that promise swift and substantial returns.
Reports from CryptoCrypto suggest that the increased interest in memecoins has been diverting attention from ETH, thereby contributing to its consolidation phase.
However, another report by CryptoCrypto hinted at a potential overheating of the market, particularly with regards to DOGE, which might lead to a corrective phase soon.
Hence, the question arises – Could a probable pullback draw investors back to ETH, triggering a scenario conducive to a short squeeze?
As per the latest data, the MACD convergence is imminent. If the pattern unfolds as projected, it could further affirm the anticipated movement of ETH over the upcoming weekend.
Conversely, the RSI indicates an overbought market condition, with 74% of the price trend in the past two weeks showing an upward trajectory – hinting at a potential reversal of this trend in the near future.
Considering these factors collectively, one could argue that ETH is gradually losing its footing in key indicators, leading to a rise in selling pressures as traders ride the memecoin wave.
If this pattern persists without a change in momentum, it might trigger a liquidation of long positions, compelling holders to sell their assets.
Such a scenario could impede ETH’s ability to gain momentum during Bitcoin’s peak moments, often signaling the start of the altcoin season.
ETH Investors Eyeing the Market Dip
Typically, when retail investors begin offloading their assets, it often signals a market peak as they cash out their profits.
In contrast, significant holders who enter an accumulation phase at a local low may establish a market bottom, perceiving it as an opportunity to buy during a potential price dip.
Throughout the past three days, as ETH’s upward movement stalled, influential holders strategically purchased ETH at discounted rates in anticipation of Bitcoin’s ongoing surge, along with a projected influx of investors into altcoins.
Consequently, a substantial amount of ETH tokens were withdrawn from exchanges, leading to a 10% weekly increase despite prevailing market anxieties.
In conclusion, ETH finds itself at a crucial juncture, influenced by a variety of factors that will impact its future trajectory.
If memecoins continue to divert liquidity away from Bitcoin traders, the potential for a short squeeze in ETH might depend on the activities of major holders, thereby exposing ETH to possible uneven concentration and sudden price fluctuations.