Key Points
- Ethereum volume surges 85% in two weeks, reaching $7.3 billion.
- ETH struggles to maintain a price above $3,300.
- Rising exchange reserves suggest increased selling pressure.
- Consolidation is likely before a breakout toward $4,000.
Ethereum (ETH) has witnessed an unprecedented volume surge, with trading activity increasing by 85% in November. This dramatic rise has pushed Ethereum’s total trading volume from $3.84 billion on November 1 to $7.3 billion by mid-month.
Such a spike is unusual, especially after a relatively stagnant Q3, and signals renewed interest in the Ethereum network.
Source : CryptoQuant
The recent Ethereum volume surge was influenced by several macro factors, including the unexpected results of the U.S. presidential election and Ethereum’s increasing institutional adoption through ETF inflows.
Additionally, Bitcoin’s consolidation near $90,000 has historically driven capital flows into Ethereum, creating a ripple effect across the altcoin market.
Despite this, Ethereum’s price performance remains muted. After briefly touching $3,300, ETH retraced to around $3,000, unable to maintain its upward trajectory.
Competitors like Ripple (XRP) and Cardano (ADA) have outperformed ETH during the same period, raising concerns about Ethereum’s ability to capitalize on its growing trading activity.
CRYPTO BREAKING NEWS
XRP and Toncoin Surge as Bitcoin Crosses $66K and Ethereum Dips. Bitcoin’s dominance rises to 51.78% while overall crypto market cap drops by 0.85% to $2.53T. XRP surges 5.83% to $0.627567, with trading volume hitting $1.80B amid strong investor… pic.twitter.com/PUebSRk0BA— InnovatekMobile (@Neome_com) July 25, 2024
Why ETH Consolidation Phase Is Likely Before $4,000
Rising Selling Pressure
While the Ethereum volume surge indicates increased market activity, it has also coincided with a steady rise in exchange reserves. When more ETH moves into exchanges, it often signals that investors are preparing to sell. This has created additional resistance for Ethereum, particularly at the $3,400 level, a critical price point it last tested in July 2024.
As ETH faces increased selling pressure, a consolidation phase becomes more likely. This occurs when the market stabilizes, with buying and selling forces balancing out.
During this period, ETH prices are expected to trade in a narrow range, potentially between $3,000 and $3,400, before a clear breakout can occur.
Volatility Compounds Uncertainty
Ethereum’s price movement has been characterized by heightened volatility in recent weeks. For instance, the token experienced a dramatic 12% surge on election day, only to pull back sharply in the days that followed.
Historically, such rapid gains often precede corrections, which align with ETH’s current price retracement.
This erratic behavior contrasts with the performance of other altcoins like Ripple and Cardano, which have shown more stable growth patterns.
Ethereum’s inability to hold gains above $3,300 reflects the challenges of sustaining momentum amid fluctuating market dynamics.
Path to Recovery: What ETH Needs for a Breakout
Accumulation by Large Holders
For Ethereum to overcome the current consolidation phase, large HODLers must step in to absorb the selling pressure. Increased accumulation by institutional and retail investors would reduce the number of tokens available for sale, creating a favorable environment for price growth.
Bitcoin’s Influence
Bitcoin’s consolidation near $90,000 has historically been a precursor to altcoin rallies, including Ethereum. However, for ETH to truly benefit, Bitcoin must break through the $100,000 psychological barrier.
Such a move would likely restore broader market confidence and draw more capital into Ethereum, supporting its journey toward $4,000.
Consolidation Before Breakout: A Probable Scenario
The Ethereum volume surge is undoubtedly a positive indicator of increased network activity, but it is not enough to guarantee immediate price gains.
Rising selling pressure and erratic price movements suggest that ETH is likely to remain in a consolidation phase in the short term.
Trading between $3,000 and $3,400 could provide Ethereum with the stability needed to prepare for its next big move.
If market conditions improve, ETH may finally breach the $3,400 resistance and target $4,000 before the end of the year. However, this will depend on:
Sustained accumulation by large investors.
Broader market momentum, led by Bitcoin’s potential rally past $100,000.
As Ethereum navigates this period of consolidation, the crypto community will be watching closely to see whether the recent volume surge can translate into lasting price momentum.
