Ethereum price hit bottom at $3,118, as bears gather strength in highest pain scenario

Ethereum hit bottom at $3,118 earlier today, hitting a five-month low.
Based on Santiment data, the ratio of active Ethereum addresses vs. price implies a bullish narrative.
Analysts at JP Morgan believe that Ethereum faces stiff competition from DeFi to maintain its dominance in the ecosystem.

Ekta Mourya FXStreet

Ethereum price dropped to a five-month low earlier today. Proponents believe that Ethereum’s dominance in the crypto ecosystem has dropped.

Ethereum bears push the altcoin’s price lower

Ethereum price dropped below $3,118 as bears took over the altcoin. Ethereum price hit a new five-month low. Though the altcoin’s market capitalization exploded in 2022, analysts have predicted that Ethereum’s dominance in the market could shrink this year.

According to the average market value to realized value (MVRV), the current price is the most pain that Ethereum traders have felt since July 2021. The metric is obtained by dividing an asset’s market capitalization by realized cap. Average MVRV implies a bullish outlook on Ethereum price.

Ethereum’s average MVRV

Analysts at JP Morgan believe that Ethereum is competing with DeFi protocols to maintain its dominance. The leader in financial services believes that a delay in sharding could make it challenging for Ethereum to compete with DeFi projects in the future.

Ethereum has a strong network of developers and contributors that offer the altcoin a solid foundation to drive adoption and utility. However, there is a spike in competition from DeFi projects and Ethereum-killers with their rising on-chain activity and active users.

@ChartSimpson, a crypto analyst and trader, believes that Ethereum was oversold since the crypto market bloodbath that followed the Covid crisis in 2020.

$ETH has not been this oversold on the daily RSI since the March 2020 Covid crash.
— Chart Simpson (@ChartSimpson) January 7, 2022

FXStreet analysts believe that Ethereum is in the ideal bearish Ichimoku breakout.

Author

Ekta Mourya

FXStreet

Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.