As the crypto market recovers, Ethereum aims for a breakout rally to cross the $4,000 psychological resistance and kickstart a fresh bull run.
As Bitcoin pushes above the $105,000 resistance, Ethereum is gradually making a comeback. Over the past 24 hours, Ethereum’s price has increased by 1.89%, nearing the crucial $3,200 psychological resistance.
With a market cap of $385 billion, the largest altcoin is on the verge of a breakout rally. Will the broader market’s short-term recovery fuel this ETH price breakout? Let’s find out.
Ethereum ETFs Flow Stay Red Despite Steady Fed Rates
While U.S. spot Bitcoin ETFs recorded $92 million in inflows, institutional support for Ethereum is struggling to resurface. On January 29, despite the FOMC’s decision to keep federal rates steady, U.S. Ethereum ETFs saw an outflow of $4.82 million.
Grayscale’s mini Ethereum trust and Bitwise both recorded net outflows. Grayscale’s ETHE sold $15.57 million worth of Ethereum, while Bitwise offloaded $4.05 million.
On the other hand, BlackRock and Fidelity bought $9.49 million and $4.49 million worth of Ethereum, respectively. Other Ethereum ETFs reported no significant changes in flow.
ETH Price Analysis Suggests Breakout Chances
Ethereum’s price action on the 4-hour price chart shows a persistent struggle to gain bullish momentum. Recently, Ethereum’s price dropped to $3,000 for the fourth time in the past 30 days.
However, following a double-bottom reversal and a broader market recovery, Ethereum presents significant upside potential.
With a 2.80% bullish engulfing candle, Ethereum is currently trading at $3,200, forming a Doji candle on the 4-hour chart.
Ethereum Technical Insights and Price Targets
As Ethereum faces crucial psychological resistance, technical indicators signal a potential buying opportunity. The short-term reversal, coupled with the bullish engulfing candle, has pushed Ethereum past the midline of the Bollinger Bands.
With the upper Bollinger Band declining, the short-term reversal points to a potential breakout. Additionally, the True Strength Index (TSI) has shown a positive crossover, supporting the chances of a bullish rally.
The Fibonacci retracement levels highlight a key resistance at $3,271, aligned with the 23.60% Fibonacci level. Therefore, along with the local resistance trendline, Ethereum faces multiple resistance levels.
However, with the broader market recovery, Ethereum could follow a trajectory similar to its 2021 bull run. A breakout above the resistance trendline could propel Ethereum to the $4,071 resistance.
Furthermore, Fibonacci levels suggest upcoming price targets at $4,361 and $4,725. On the downside, the $3,000 psychological mark remains resilient and will likely absorb potential surprise supply waves.
Downside Risk Spikes to 40% as MVRV Declines
Despite the broader market recovery, on-chain data for Ethereum signals a potential correction ahead. In a recent post on X, Ali Martinez pointed out that Ethereum’s MVRV data suggests a possible downside of 40%.
Ethereum’s MVRV has recently dipped below its 160-day moving average. The last time this occurred, Ethereum saw a 40% correction from $3,500 to $2,100.
#Ethereum $ETH MVRV has dropped below the 160-day MA once again. The last time this happened was on June 23, 2024, which led to a 40% price correction from $3,500 to $2,100. pic.twitter.com/zbnqPqzr0D
— Ali (@ali_charts) January 29, 2025
However, with market conditions shifting, a rebound is possible if institutional support resurfaces and the broader market continues to recover.
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