Ethereum (ETH) Stands at a Critical Crossroads, Its Fate Hinging on the $2,250 Resistance Zone

Ethereum (ETH), the digital powerhouse that once promised to revolutionize the internet with its smart contract capabilities, now finds itself at a critical crossroads.

The second-largest cryptocurrency, Ethereum (CRYPTO: ETH), is showing signs of a deeper decline despite a recent price increase.

Here’s a look at what happened and what it means for investors.

What Happened: According to renowned market analyst Ali Martinez, the lower price node of the Fibnoacci pricing bands has identified $1,440 as another potential downside target for Ethereum. This level represents a significant 27.4% decline from current market prices.

Data from the Cost Basis Distribution, which analyzes the price at which various investors acquired their ETH, aligns with these bearish projections. Currently, Ethereum is hovering above a crucial support level at $1,887.

Martinez says a breach of this support could trigger a cascade of selling, pushing the price towards the lower targets of $1,440, $1,250, and ultimately, $1,000.

The analysis also showed that Ethereum broke down from an ascending triangle on the 3-day charts. This pattern usually signals a continuation of the prevailing trend, which in this case, is bearish. According to the technical formation, Ethereum’s price target could drop to around $1,000.

«The breakdown from the ascending triangle, the identification of key downside targets, and the alignment with the Cost Basis Distribution all point towards further price declines,» Martinez said.

Martinez adds that the recent actions of large Ethereum holders, also known as whales, suggest a "concerted distribution effort."

«Over the past four months, the count of wallets holding 10,000 ETH or more has decreased by 80, while ETH whales, defined as wallets holding 100,000 ETH or more, have sold 130,000 ETH during the same period.»

This activity comes as the Spot ETFs saw a net outflow of $760 million in the last month.

«The ETF outflows and the fear-driven transfer of 100,000 ETH to investors with clear selling intent highlight a broader market apprehension and a preference for reducing exposure to Ethereum.»

Related Link: As Bitcoin Price Hits $21K, Analyst Says 'Smart Money Is Pulling Out' With A Final Bitcoin Price Target In Sight

Why It Matters: The fate of Ethereum will depend on whether bulls can break the crucial resistance zone between $2,250 and $2,610. If the bulls manage to push the price above this zone, it would invalidate the current bearish market outlook.

«A decisive break above this level would signal a shift in momentum, potentially triggering a wave of buying that could propel ETH towards higher price targets.»

However, overcoming this resistance zone will be no easy feat. The sheer volume of sellers lurking within this range will likely create a formidable barrier. Bulls will need to demonstrate significant buying pressure to absorb the selling and drive the price upwards.

«If this resistance holds and the price pulls back, it could set the stage for a deeper decline and potentially set lower price targets for the second-largest cryptocurrency.»

Later this week, the U.S. Bureau of Economic Analysis is set to release the second-quarter GDP report, which could have implications for the cryptocurrency market. Economists polled by Reuters are expecting a 2.4% rise in the second quarter after a 0.6% increase in the first quarter.

A strong GDP reading could lead to further interest rate hikes by the Federal Reserve, which might put pressure on cryptocurrency prices.