Ethereum has been in a sustained downtrend since mid-December. Selling has reached record levels over the past three months, causing the price to fall by more than 50%. ETH has dropped from

$3,993 to current levels below $1,900.

Ethereum has reached oversold territory

Qiao Wang, a well-known crypto industry expert and founder of Alliance DAO, recently noted that Ethereum (ETH) is at historically oversold levels, comparable to previous significant declines. He drew parallels between the current situation and key events in the past: the Terra crash in 2021, the 2018 bear market when ETH was called a “double-digit shit coin,” and the aftermath of the DAO hack in 2016. Each of these periods was characterized by extreme pessimism, but subsequently became a good buying moment for long-term investors. Thus, analysts suggest that the current ETH price may be close to the point of undervaluation.

In addition, crypto analysts have noted that Ethereum’s 3-year Stochastic RSI has reached oversold levels. This indicator, which measures momentum and identifies potential trend reversals, has signaled major buying opportunities in the past when deeply oversold. Each time this signal has appeared previously, it has been followed by a significant rally in the crypto asset, indicating the possibility of a bullish reversal in the near future.

Potential Catalysts for ETH Recovery

Despite the prevailing bearish sentiment in the crypto market, Ethereum may receive a boost for recovery thanks to positive developments. For example, the US Securities and Exchange Commission (SEC) has approved Fidelity’s proposal to include staking in the Ethereum Spot ETF (FETH). Grayscale and 21Shares have also filed for similar approvals. If these initiatives are implemented, it could boost investor confidence and drive demand for ETH.

In addition, the upcoming Ethereum Pectra upgrade, which aims to improve user experience with new features, has already been successfully tested on the Holesky and Sepolia networks. As the mainnet launch approaches, this upgrade could help restore ETH’s price momentum.

So, despite the current challenges, Ethereum could be on the cusp of significant changes that could shift the market dynamics in favor of the bulls.

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