Ethereum (ETH) has experienced a slight pullback of over 15%, currently trading at around $3,375 as of Friday, December 27, during the early European trading session. Despite this dip, Ethereum is holding steady at a crucial support level with a market cap of $406 billion and a daily trading volume of $23 billion. This setback may actually set the stage for a potential breakout that could lead to new highs for the cryptocurrency.
The signs are pointing towards a rally for Ethereum in the near future. The broader altcoin market, as measured by the TOTAL2 index, recently retested its previous all-time high near $1.6 trillion. This indicates that Ethereum could potentially rally towards $5,000. Additionally, the ETH/BTC trading pair is showing a macro reversal pattern along with bullish divergence on the weekly Relative Strength Index (RSI), further supporting the outlook for a rally.
Whale investors are also shifting their strategies, rebalancing their portfolios in anticipation of a strong altseason. Ethereum’s recent performance has added to this optimism, with its Open Interest (OI) and trading volume reaching a record high of over $23 billion. Data from Coinglass shows a decrease in the total supply of Ethereum on centralized exchanges, largely due to increasing demand from U.S. spot Ether ETF issuers.
U.S. spot Ether ETFs, such as BlackRock’s ETHA and Fidelity’s FETH, have attracted significant inflows and now manage billions in assets. On-chain data indicates a withdrawal of 1,500 Ether from Binance in the past 24 hours, aligning with the trend of declining Ethereum supply on exchanges and suggesting a growing demand with reduced selling pressure.
From a technical standpoint, Ethereum’s price has broken out of a year-long falling logarithmic trend, signaling strong bullish potential. It has also held above its 50-week Moving Average for the past two months, further supporting the case for a rally. As a result, Ether’s price is well positioned to reach $5,232 in the near term, coinciding with the 1.618 daily Fibonacci Extension.
Overall, Ethereum’s resilience and positive indicators are setting the stage for what could be a spectacular finish to the year. Investors and traders are closely watching for any further developments that could drive Ethereum towards new highs in the coming days and weeks.