Ethereum (ETH) Rally Fades as Indicators Point to Reversal After $1,800 Local Top

Key Takeaways

• Despite a recovery from its April low of $1,453, ETH is struggling to maintain upward momentum.
• The price–DAA divergence has flipped bearish, falling to -51%, signaling reduced user engagement.
• Over 69 million ETH between $2,066 and $2,517 could create selling pressure for the altcoin.
• ETH has been trading sideways between $1,756 and $1,833 since April 23, indicating indecision.

Ethereum (ETH) kicked off the new month by failing to break above the key $2,000 resistance, despite earlier signs of bullish momentum. Several indicators now suggest that this rejection at the crucial psychological level could persist.

At the time of writing, ETH trades at $1,833, a solid recovery from its April low of $1,453. However, current market signals indicate that Ethereum’s price may drift closer to that recent bottom rather than stage a quick short-term rally.

Here is why that scenario might play out.

Ethereum’s On-Chain Strength Wanes

One key indicator of Ethereum’s potential downturn is the price–Daily Active Addresses (DAA) divergence. For most of the final week in April, this metric remained positive.

 This is typically a bullish sign that suggests that the price is backed by increasing on-chain activity.

However, that trend has reversed. As of this writing, Ethereum’s price DAA divergence has plunged to -51%, indicating a notable decline in user interaction with the network.

If this drop in activity persists, ETH may struggle to sustain its recent gains.

More Warning Signs

In addition to declining network activity, CCN analyzed the Global In/Out of the Money (GIOM) metric. GIOM tracks the distribution of addresses based on their average purchase price compared to the current market value.

This metric helps identify key support and resistance zones. A large concentration of addresses holding coins in profit typically forms a support level, as holders are less likely to sell.

On the other hand, when more addresses are at a loss, it signals a resistance area, since holders may be looking to break even, creating selling pressure.

According to IntoTheBlock, Ethereum faces major resistance between $2,066 and $2,517. Approximately 12.67 million addresses bought over 69 million ETH in this range, now in unrealized losses.

If ETH’s price attempts to break above this zone, many of these holders may sell to break even, creating selling pressure. As a result, Ethereum could struggle to push past $2,066, potentially leading to a price pullback.

ETH Price Analysis: Upswing Threatened

On the technical side, Ethereum’s price rose beyond $1,800 after breaking out of a descending channel. However, since April 23, the cryptocurrency has been consolidating between $1,756 and $1,833.

Based on the daily chart, the drop in the Chaikin Money Flow (CMF) reading might have contributed to this. Earlier, the CMF on the ETH/USD daily chart was 0.16.

Today, it has declined to 0.04, indicating fading buying pressure. Should this trend continue, Ethereum’s price could drop to the underlying support at $1,578.

However, if demand for ETH increases again, this prediction might not pass. The crypto market value might rise to $2,028 in that scenario.

If validated, ETH could experience another upswing. In that case, it could rise to $2,426 at the 0.382 Fibonacci level.