Ether (ETH) Sell-Off Intensifies Below $4,200 Amid Higher Burning Activity

Although Ether (ETH) had been witnessing a strong sell-off across the board, flirting with the $4,000 handle, the activity on the Ethereum network keeps higher as burning activity remains alive.

The recent EIP-1559 update allows a new burning mechanism that makes ETH a deflationary crypto after taking large portions of the second’s largest crypto by market cap.

As of press time, the burn rate is set at 12,000 coins per day, which had seen over 930,000 ETHs burned. Still, the cryptocurrency keeps plunging below the 200-period simple moving average at the H4 chart, as it has been acting as a dynamic resistance.

Bearish Case Below $3,900

Bulls attempted to gather momentum above $4,300, but the price lost steam and managed to make a new low below the psychological level of $4,000.

With the odds in favor of the bears at this stage, one could expect a bearish continuation towards the next barrier to the downside at $3,900, which was a bottom set during the October 28 session.

However, as the RSI indicator is hovering around the oversold condition, ETH could be bottoming out at the current levels, and it seems that a bullish divergence is being developed.

Bulls Momentarily Favored

Therefore, after the price cracks above $4,200, the bull-run could resume in ETH and eventually fuel the crypto to test the 50-period simple moving average at $4,500.

At this moment, there is no bearish crossover that signals a stance favoring the sellers. That’s why a clearance of the $4,500 level with a two-candlestick closure above it could open the doors for further rallies toward the $4,720 zone in a first degree.

If Ether consolidates above such an area, bulls could catch bids and eventually refresh its all-time highs, shifting its focus towards the critical threshold of $5,000 in the optimistic scenario. This view could strengthen after the confirmation of the bullish divergence at the RSI indicator.