Source: Cointelegraph.com NewsKey takeaways:<\/p>\n
Ethereum\u2019s market dominance has hit overbought RSI levels not seen since May 2021, historically followed by major pullbacks.
\nETH\/USD is showing a bearish divergence on the four-hour chart, hinting at a potential 10\u201315% price correction.
\nDespite the near-term risks, some analysts view a pullback as a \u201cbuy-the-dip\u201d setup before a possible move toward $3,500\u2013$3,800.<\/p>\n
Ether (ETH) has surged over 50% month-to-date in May, vastly outperforming the broader crypto market\u2019s 15.25% gain. The rally has pushed Ethereum\u2019s market dominance (ETH.D) toward the critical 10% threshold for the first time since March. Source: Cointelegraph.com NewsKey takeaways: Ethereum\u2019s market dominance has hit overbought RSI levels not seen since May 2021, historically followed by major pullbacks. ETH\/USD is showing a bearish divergence on the… <\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[5],"tags":[],"_links":{"self":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts\/129232"}],"collection":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=129232"}],"version-history":[{"count":0,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts\/129232\/revisions"}],"wp:attachment":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=129232"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=129232"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=129232"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nBut the rising dominance accompanies signs of overheating, indicating that Ethereum bulls should not celebrate the rally just yet.
\nEther\u2019s RSI most overextended since May 2021
\nThe strong recovery in Ethereum\u2019s crypto market share has pushed its daily relative strength index (RSI) to its most overbought zone since May 2021, raising red flags for traders betting on further upside, at least in the short term.
\nHistorically, such extreme RSI levels on ETH.D have marked the beginning of major pullbacks. One notable instance occurred in early July 2024, when ETH dominance peaked near similar RSI levels.
\nETH.D daily performance chart. Source: TradingView Over the following 315 days, ETH.D dropped by more than 17.5%. The current RSI spike, again above 80, mimics a similar setup, suggesting that Ethereum could be nearing a local top in its market share.
\nAdding to the bearish outlook, ETH.D remains below its 200-day exponential moving average (200-day EMA; the blue wave). This resistance level has repeatedly capped Ethereum\u2019s dominance during previous recovery attempts.
\nPrevious overbought pullbacks have initially pushed Ethereum\u2019s market share toward its 50-day EMA (the red wave).
\nThe ETH.D metric, therefore, risks declining toward its current 50-day EMA support at around 8.24% by June, suggesting potential capital rotation out of Ethereum markets to other coins in the coming weeks.
\nBearish divergence signals 15% ETH price drop
\nOn the four-hour ETH\/USD chart, a classic bearish divergence is emerging, where Ethereum\u2019s price continues to print higher highs, but momentum indicators trend lower.
\nCrypto trader AlphaBTC noted that ETH is showing \u201cthree clear drives of divergence,\u201d a setup often preceding trend exhaustion. He added that key Fibonacci levels align with potential support zones, suggesting a pullback could be imminent.
\nETH\/USD four-hour price chart. Source: AlphaBTCWith ETH hovering near the $2,740 Fibonacci extension, profit-taking pressure may intensify, opening the door for a short-term correction toward lower Fib levels at around $2,330 or even $2,190, down 10%-15% from the current prices.
\nIndependent market analyst Micha\u00ebl van de Poppe suggests ETH\u2019s decline in the coming weeks could serve as a \u201cbuy-the-dip opportunity,\u201d indicating that the cryptocurrency would eventually climb over $3,500.
\nRelated: Altcoins\u2019 roaring returns and falling USDT stablecoin dominance suggest \u2018altseason\u2019 is here
\nVeteran trader Peter Brandt further predicts a \u201cmoon shot\u201d rally to over $3,800.
\nThis article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.Read More<\/a><\/p>","protected":false},"excerpt":{"rendered":"