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Ethereum (ETH/USD) strong comeback has faded in the past three days as investors assess the strong recovery. The coin has dropped to $3,258, which is lower than this week’s high of $3,483. It is still about 50% above the lowest level this year.
Ethereum recovery fades
Ethereum, like other altcoins, has been in a strong bullish trend in the past few days as the risk-on sentiment prevailed.
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In a few weeks, the price of Ethereum managed to rise from a low of $2,154 to as much as $3,400. This performance was mostly because investors were open to risky assets even after the Fed sounded hawkish in its March meeting.
The performance also mirrored that of other assets like stocks. In the past few weeks, stocks have had a strong recovery, with the tech-heavy Nasdaq 100 index leading the way. Cryptocurrencies have a close correlation with American indices.
Ethereum has also retreated because of the recent Axie Infinity hack that led to a loss of over $600 million loss. Axie Infinity is a blockchain platform that is built in Ethereum’s blockchain.
Therefore, investors are concerned about the huge sums of money that are currently backed the DeFi ecosystem. According to DeFi Llama, there are over $220 billion of these funds at risk. Besides, there are limited regulations that govern the sector.
Another reason why Ethereum price has retreated is that investors are simply taking profits. Historically, huge parabolic rallies are usually followed by a pullback.
April will be a big month for Ethereum since there are signs that developers will take the next step in the upgrade process. In March, they pushed the merge between the old and the new version happened in the Kiln testnet. If things work well, the new version could be moved to the mainnet.
Ethereum price prediction
The daily chart shows that the ETH price has formed a break and retest pattern in the past few days. It is now trading at $3,254, which is an important level since it was its highest point on February 9th. The coin remains above the 25-day and 50-day moving averages while the Relative Strength Index has kept rising.
Therefore, the outlook for April is still bullish, with the next key level to watch being at $4,000. This view will become invalid if the price declines below $3000.