Ethereum (ETH), the largest alternative coin in the cryptocurrency market, is currently showing a bearish divergence. This is characterized by the price of Ethereum rising while the Relative Strength Index (RSI) momentum oscillator records lower lows. The RSI is a tool that measures whether an asset is overbought or oversold, with values ranging from 0 to 100.
Investors use the difference between price movements and the RSI to identify potential shifts in market sentiment, which can be either bullish or bearish. In this case, despite Ethereum’s significant price increase over the weekend, the lack of a corresponding rise in the RSI has led investors to anticipate a downward trend.
Bearish divergence, also known as a bear trap, suggests that buyers are exhausted and indicates that the dominant upward trend may not be sustainable. Ethereum saw a notable price increase of over 6% over the weekend, outperforming Bitcoin. However, since then, the altcoin has dropped by 4% due to the strong exits from spot Bitcoin ETFs and developments related to current macroeconomic uncertainties.
Following recent economic data from the US, concerns about “stagflation” have increased. JPMorgan CEO Jamie Dimon has warned of a scenario similar to the 1970s, characterized by persistent inflation and slow economic growth. This warning has heightened market concerns.
The reduced expectations for interest rate cuts are particularly negative for risk assets like Bitcoin and other altcoins. As a result, Ethereum is poised to end its seven-month streak of gains with its first negative month this year.
The cryptocurrency market has been experiencing a significant downtrend due to ongoing macroeconomic uncertainties and regulatory concerns. This reflects the challenges of navigating volatile market conditions. Traders and investors must exercise caution when managing their investment strategies in this rapidly evolving environment.
Disclaimer: The information provided in this article is not investment advice. Investors should be aware of the high volatility and risk associated with cryptocurrencies and should conduct their own research.
