- ETH selling pressure eased after the inauguration.
- But demand had not yet picked up; Is recovery possible?
Ethereum (ETH) struggled to keep up with Bitcoin in the second half of January.
In fact, Bitcoin (BTC) hit an all-time high of $109.5K, but ETH was still down almost 20% from its recent high of $4.1K. However, the altcoin could be primed for a recovery amid renewed buying interest.
According to Joao Wedson, founder of on-chain analytics firm Alphractal, ETH’s selling pressure has significantly reduced, which could accelerate its recovery.
“ETH selling pressure has eased slightly, giving buyers a short-term advantage. If buying pressure returns, it will increase quickly.
Source: Alphractal
The shared chart shows ETH’s price action along with its buying and selling pressure. On January 19, ETH experienced a massive sell-off before the inauguration (red dip), but subsided afterward (green spike).
This revealed that sales declined, but there was no strong demand to drive ETH higher.
Feelings about the restructuring of the FE
Away from the price charts, the Ethereum Foundation (EF), a non-profit organization designed to support ecosystem functions and operations, made headlines this week.
EF has been under relentless pressure due to constant ETH dumps and a lack of transparency and direction.
However, Vitalik Buterin recently announced an overhaul of EF to align it with the needs of the ecosystem. Some seemed dissatisfied with the planned changes.
According to Kyle Samani, founder of crypto-VC firm Multicoin Capital, there was a “lack of urgency” from EF.
“There is still no total emergency, the FE leadership is not in contact with the needs of its main constituents and there is still no North Star”
That said, ETH users appear optimistic about the altcoin’s prospects following EF’s changes, as revealed by an uptick in positive weighted sentiment. This could increase the chances of recovery.
Source: Santiment
So, is the strong demand for ETH likely to drive the recovery? We checked the Coinbase Premium Index, a metric that tracks US investors’ appetite for altcoin.
As of this writing, the indicator has moved from negative to neutral territory. Any further progress in the indicator could suggest an increase in US demand and likely fuel the expected recovery.
Source: CryptoQuant
That said, ETH price action was below key moving averages (MAs), implying that a short-term downtrend was still intact at press time.
A rise above the MA could strengthen the bullish conviction and make the $3.5k and $3.6k targets within reach. However, the $3,000 level could be exploited if the bearish pressure persists.
Source: ETH/USDT, TradingView
