Ethereum (ETH) bounced strongly off a former area of resistance at $2.4K that could now be acting as support as the selling pressure appears to be easing.
Trading volumes declined by 58% in the past 24 hours and currently sit at just $5.2 billion. This figure accounts for as little as 1.7%, indicating that liquidity has dried up lately.
The market clearly needs to tap on lower price zones where there could still be high demand for ETH waiting to be tapped on to keep this rally going.
Ledger Cold Wallets Suffered a $90M Hack
It appears that investors are ignoring the news associated with a $90 million hack of Ledger cold wallets. This incident could have profound implications for how the public perceives what has been considered one of the safest ways to store cryptocurrencies.
The company acknowledged the situation in an X post published yesterday, indicating that cold wallets bought from a reseller called CryptoBillis in Europe appear to have been targeted by bad actors.
Nonetheless, the crypto market recovered a bit after two days of strong losses. As we highlighted in a recent Ethereum price prediction, a strong pullback to $2,400 was likely, as exchange-traded funds (ETFs) linked to ETH experienced strong net outflows between September 29 and October 5.
The decline we saw on Wednesday and Thursday was the market’s response to an absence of liquidity that could have prompted market makers to push the price to lower thresholds until finding fresh buyers.
Ethereum Price Forecast
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See all Ethereum forecastsETH May Have to Dip to $2,300 Before the Rally Resumes
Data from SoSoValue shows that net inflows to Ethereum exchange-traded funds (ETFs) have now been negative for 9 days in a row, amounting to nearly $700 million thus far.
Meanwhile, we are once again in negative territory in the MVRV Ratio. This does not necessarily invalidate our baseline scenario that a bull market has begun for Ethereum, as we are still in the early stages of this cycle.
However, it does indicate that we are at a critical juncture. ETH needs to stay above its 200-day exponential moving average (EMA) or otherwise risk a much deeper correction, as a drop below this mark will erode the market’s confidence in this bull market.
Our baseline scenario is that the price action will bounce strongly off these levels and jump back to $2,800 shortly. Meanwhile, our mid-term target for the token is still $3,400.
4-Hour Chart Shows Ideal Buy Zone for ETH
Thus far, the price action has reacted positively to this latest decline, as buyers picked up ETH at $2,420 as expected. However, the token may have to go lower, as the most relevant liquidity zones seem to be sitting between $2,370 and $2,300.
ETH bounced strongly off this level in the past, and this was the price zone that created the necessary demand to push the token to $2,800 the last time. Hence, we see it as a high-probability zone for a long position.
If the target is set at $2,800, this is a trading opportunity that offers a potential 4.8x risk-reward ratio.
