Ethereum [ETH] faced challenges against Bitcoin in the latter part of January.
While Bitcoin [BTC] achieved a record high of $109.5K, ETH was still down approximately 20% from its recent peak of $4.1K. Nonetheless, there are signs that the altcoin could be gearing up for a comeback due to a resurgence in buying interest.
Joao Wedson, the founder of Alphractal, an on-chain analysis firm, noted a significant decrease in selling pressure on ETH, which might pave the way for its recovery.
“The reduced selling pressure on ETH has given buyers a temporary edge. If buying pressure picks up, we may see a swift rise in price.”
An analysis chart depicted ETH’s price movements in relation to its buying and selling pressures. On January 19th, there was a notable sell-off before the inauguration (indicated by a red trough), which later eased (marked by a green peak).
This data shows that selling pressure has diminished, although there is still a lack of robust demand to drive ETH’s value upwards.
Market Sentiment amidst EF Restructuring
Aside from price analysis, the Ethereum Foundation (EF), a non-profit entity supporting the project’s ecosystem operations, made headlines recently.
The EF has been criticized for consistently selling off ETH and lacking transparency and clear direction.
However, Vitalik Buterin recently announced a restructuring of the EF to better align with the ecosystem’s requirements, although some stakeholders expressed dissatisfaction with the proposed changes.
According to Kyle Samani, the founder of Multicoin Capital, a crypto VC firm, there appears to be a ‘lack of urgency’ from the EF.
“The EF’s leadership seems disconnected from the core community’s needs, and a clear direction is still absent.”
Despite this, ETH users exhibited optimism about the altcoin’s future prospects post the EF restructuring, as seen in the increased positive sentiment. This uptick in positivity could enhance the chances of a successful recovery.
Will the strong demand for ETH be the catalyst for its recovery? Examining the Coinbase Premium Index, a measure of U.S. investors’ interest in the altcoin, may provide some insights.
Presently, the index has shifted from negative to a neutral position. Further progress in the index could indicate heightened U.S. demand, potentially fueling the anticipated recovery.
However, it is worth noting that ETH’s price remains below significant Moving Averages (MA), suggesting a prevailing short-term bearish trend.
A breakthrough above the MA could strengthen bullish sentiment, setting sights on the $3.5K and $3.6K levels. Conversely, sustained bearish pressure could lead to a test of the $3K level.