Ethereum Spot Volume Decline Signals Potential Price Recovery Ahead

Ethereum’s spot trading volume is declining, potentially leading to reduced volatility amid ongoing price corrections. Despite being oversold, technical signals hint at a possible short-term bullish reversal, backed by the Pectra upgrade that aims to enhance network usability. Analysts are watching for a recovery if key resistance levels are broken, although macroeconomic factors remain a concern.

Ethereum has experienced a notable dip in spot trading volume recently, a factor that some analysts believe may lead to decreased volatility during the current price correction. As the cryptocurrency sits close to the $1,769 mark, over 40% down from its value at the start of the year, the ongoing corrective trend brings some concerns for investors. Still, certain technical signals are hinting at a potential reversal and, of course, there’s the upcoming upgrade that could shake things up.

In the latest analysis shared by market expert Darkfost on X, the drop in Ethereum’s spot volume is significant. On his visual chart, both the size and intensity of trading volume bubbles are diminishing, suggesting fewer aggressive sell-offs are taking place. This trend, while not definitively signifying a market bottom, might indicate that the pressure driving prices down is easing. Currently, ETH is clocked at around $1,771.84, showing a slight 2.12% decrease in the last 24 hours.

On the technical front, there are signs that may point towards an upturn. Analyst BitBull noted that the Stochastic Relative Strength Index (RSI) has dipped into oversold territory, even lower than the levels recorded during the infamous FTX crash back in late 2022. This situation could suggest a possible bullish crossover on the horizon, which, if realised, could lead to a rebound in prices. Some are eyeing a target price of $2,600 for Ethereum come May.

The sentiment among analysts is cautiously optimistic, with Crypto Rover also suggesting that an “Ethereum bullish crossover” could be afoot. There’s talk of opportunities emerging for buyers who are willing to stand by ETH as the general market attitude remains a little reserved, despite initial signs of a pivot.

Looking further ahead, the Ethereum network is on track for the Pectra upgrade on May 7, expected to enhance usability, facilitate staking, and reduce transaction costs. New features like smart wallets and biometric authentication are also in the works. Yet, the market response to this has been tepid so far, which feels somewhat unusual considering the hype usually surrounding such upgrades. Edein Chin from Parataxix Capital remarked that while the upgrade could improve functionality, it isn’t likely to send prices skyrocketing.

Michael van de Poppe, another analyst, weighed in with thoughts on macroeconomic influences impacting Ethereum’s price action. He noted that the upcoming Federal Open Market Committee (FOMC) meeting is putting a cloud over current market sentiment, leading to a shift in liquidity towards traditional assets like gold. Despite these jitters, the scenario is quite dynamic, as traders acknowledge that the intersection of low trading volumes, oversold indicators, and the Pectra upgrade could mean that a recovery is on the cards, especially if resistance levels around $1,800 get breached.