Ethereum Death Cross is Here! What Does It Mean For ETH Prices? (2024)

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The price of Ethereum’s native token, Ether (ETH), has rebounded by over 25% a week after falling to its worst levels since December 2023. Despite the recovery, the cryptocurrency is now witnessing a bearish technical signal known as the “death cross,”—where its 50-day Exponential Moving Average (EMA) crosses below its 200-day EMA.

Is Ethereum’s Death Cross a Sign of a Sell-Off?

The death cross is traditionally considered a bearish signal, suggesting potential downward momentum. However, historical data shows on the Ethereum daily chart that it does not always lead to a significant sell-off.

For instance, Ether’s last death cross in August 2023 was followed by a consolidation phase between the 50-day (red) and 200-day (blue) EMA, and this period eventually culminated in a bullish breakout, propelling ETH prices towards $4,100 by April 2024.

This historical pattern indicates that while the death cross can cause short-term uncertainty, traders may not necessarily use it as a signal to sell. Instead, they often look to other factors, including market fundamentals and additional technical indicators, before making trading decisions.

Ethereum’s Market Shakeout: Is a Bullish Rebound on the Horizon?

Ethereum’s recent price decline has led to speculation about the continuation of its bearish trend. However, data from the futures market suggests a possible reversal.

The provided CryptoQuant chart shows Ethereum’s long liquidations, which track the liquidation of leveraged long positions in the perpetual futures market. Historically, a price rally often follows significant liquidation events in bull markets. This pattern occurs as the futures market stabilizes and spot buying pressure increases.

The recent sell-off triggered substantial long liquidations, reaching levels not seen since November 2022. This event suggests that many leveraged positions have been flushed out, potentially leading to a cooling-off period in the futures market. This reset could pave the way for renewed interest and demand, fueling a bullish surge in ETH prices.

If spot demand returns, particularly from institutional players and long-term holders, Ethereum could recover from its recent lows, supported by a more stable and less leveraged market environment.

Is Ethereum Price Bottoming Out?

Analyzing the attached ETH/USD daily chart, Ethereum is trading near $2,673, having tested support at $2,350 after the recent market turmoil. The price action shows that ETH has remained within a descending channel since its March 2024 peak of around $4,090.

This downward channel, combined with the Fibonacci retracement levels from the previous rally, suggests that Ethereum’s price may be close to bottoming out. The 0.236 Fib level at $2,750 has already provided significant resistance during recent recovery attempts.

If ETH breaks above this level, it may target the 0.382 Fib level at $3,000 next, potentially climbing towards the 0.5 Fib level near $3,200, which aligns closely with the 50-day and 200-day EMAs.

Furthermore, the Relative Strength Index (RSI) is showing signs of recovery from the oversold territory, indicating that bearish momentum may be waning. However, sustained recovery will depend on Ethereum’s ability to hold above key support levels and generate sufficient buying interest to challenge overhead resistance.

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