Amid the ongoing bloodbath in the cryptocurrency market, Ethereum (ETH), the second-largest cryptocurrency by market capitalization, has not been spared. Over the past week, ETH has experienced a significant 9% price decline, bringing it down to the $3,130 level. 

As market participants closely monitor the situation, the focus now lies on crucial levels that must be held back to prevent a deeper retrace that could lead to substantial losses and heightened liquidation rates not witnessed in months.

Crypto analyst “Inspo Crypto” has drawn attention that Ethereum’s price has retraced to levels last seen at the beginning of May. 

According to the analyst, the upcoming 8-hour trading period, represented by a 1-day candle, will be a critical juncture to determine whether the bulls have capitulated or can muster a comeback. 

A retracement above the abovementioned level could be considered a deviation from the bearish trend. However, if Ethereum fails to retest the lower trend channel at $3,170, it could pave the way for a further decline towards $2,700, consequently impacting altcoins and leading to significant losses across the market.

The analyst further asserts that, in his opinion, Ethereum has been operating within a new trend channel since October 2013. Hence, if ETH manages to hold its price within the range of $3,170  without breaking down, it would confirm an upward trajectory towards $5,000. It is important to note that this timeframe extends until the end of the year. 

Additionally, it should be considered that Ethereum is still operating within a long-term trend channel. 

If the described scenario unfolds, it would also confirm the long-term trend channel, indicating that ETH was trapped in a bearish phase between August 2023 and February 2024 and is now embarking towards $8,000 over the coming months. 

However, it is crucial to acknowledge that this analysis does not account for external factors such as monetary policy decisions or geopolitical conflicts. 

Nevertheless, if Ethereum manages to hold the $3,170 level and begins an upward ascent, the possibility of an altcoin season becomes increasingly feasible, as suggested by the analyst.

Ultimately, ETH’s next moves will affect its trajectory and impact the broader crypto landscape, particularly the altcoin market, which has also seen significant losses in recent days. 

ETH trades at $3,130 at the time of writing, reflecting a 5% decline in the past 24 hours. As a result, it becomes crucial that the token closes above the aforementioned critical level of $3,170 in the coming hours to prevent potential additional losses, as emphasized by the analyst.

Featured image from DALL-E, chart from TradingView.com

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