Ethereum Price Forecast: Biden Bowing to Trump Could Clear $704M Resistance for ETH

Ethereum Price Analysis:

Ethereum price peaked at $3,529 for Sunday, July 21, having consolidated within the narrow 5% channel between $3,450 – $3,550 over the weekend, derivatives market data highlights the key factor behind ETH’s stagnation.

Ethereum Price Stagnates at $3,500 while BTC Advances

The global crypto market survived a correction scare on Friday July 19. Critical events over the weekend have helped the bulls further tightened their stronghold on the markets momentum.

On Sunday, July 21, US President Joe Biden announced the decision to quit seeking re-election for the 2024 Presidential Elections. Enthusiasts anticipate that this could impact crypto markets positively as it further upside deepened Crypto-Friendly candidate, Donald Trump’s lead.

More so, Ethereum ETFs are expected to launch around Tuesday July 23, and many bull traders also anticipate a demand surge ahead of the landmark event.

But oddly, despite these bullish narratives dominating the media headlines over the weekend, Ethereum price failed to receive any major boost.

The chart above shows that since Ethereum price reached a weekly timeframe peak around $3,540 on Friday July 19, it has since consolidated below that level over the weekend. After multiple bullish attempts at breaching that $3540 resistance over the last 48-hours, ETH price continues to hover around $3,452 at the time of writing on Sunday, July 21.

Meanwhile, Bitcoin price has made 7% gains during this same period between July 19 and July 21. This affirms that Ethereum price has decoupled and fallen slightly behind the broader market uptrend over the weekend, raising concerns of active bearish catalyst within the ETH markets.

Bears Mount $704M Positions to Front-Run Post-ETF Sell-the-News Cycle

Based on the market movements observed over the weekend, Ethereum price has underperformed compared to Bitcoin. With the Ethereum ETFs due to launch within less than 48-hours on July 23, bear traders have started making strategic moves to make gains from this landmark event.

The Coinglass Liquidation Map chart below tracks the value of all active leveraged SHORT contracts currently listed for a specific crypto asset.

An unusually high number of traders have been Shorting Ethereum over the weekend, in anticipation that the ETH spot ETF launch on July 23 will trigger a sell-the-news frenzy.

“Sell-the-News” is a trading phenomenon that occurs when traders rapidly sell an asset in the wake of a positive event, in hopes of cashing in on the markets’ euphoric reaction.

Looking at the chart above we see that bears have mounted $704 million leverage SHORT contracts against ETH. Worryingly, this has now exceeded active ETH LONG futures contracts, which currently stands at $394 million at the time publication of July 21.

The downward pressure from ETH SHORT trades exceeding LONGs by over $300 million, partly explains why Ethereum price failed to advance above the $3,600 territory, while falling behind BTC over the weekend,

However, it remains to be seen if Joe Biden bowing out of the 2024 Presidential Campaigns race would spur spot market demand when the US markets open on Monday July 22.

Ethereum Price Forecast: Biden Announcement Could Strengthen $3,400 Resistance

As Ethereum hovers around the $3,450 mark, technical indicators suggest a cautious outlook for the week ahead.

The Bollinger Bands on the daily chart show a contracting range, indicating lower volatility and a potential consolidation phase. The upper band at $3,631.12 and the lower band at $2,852.28 outline critical resistance and support levels, respectively.

The RSI (Relative Strength Index) divergence indicator currently reads 58.34, placing it in a neutral zone but closer to overbought conditions.

This suggests that while there is still some room for upward movement, there may also be limited upside before reaching overbought territory, which could trigger a correction. The RSI’s previous peaks in early June indicate that surpassing the 70 mark could lead to a significant pullback.

Ethereum bulls need to maintain the crucial $3,400 support level to prevent further declines. Should this level fail, the next key support zone lies around the lower Bollinger Band at $2,852.

Conversely, if Biden bowing out triggers a bullish breakout, Ethereum bulls could set sights on the the next target around the upper Bollinger Band at $3,631.12.