Ethereum price has stabilized a bit after plunging to a monthly low on Tuesday. After bottoming at $3,362, it rebounded by over 4% in the overnight session to trade at over $3,500. This rebound has pushed its market cap to over $430 billion. Here are three reasons why the price of Ethereum could rebound soon.
Accumulation is continuing
First, there are signs that Ethereum has moved into an accumulation phase even as the bearish momentum accelerated this week. As shown below, this accumulation has been accelerating since May 20th.
Most of this accumulation has been happening among accounts with balances of between 10k and 100k followed by between 10 and 10k. Meanwhile, as you will see on the daily chart below, the accumulation/distribution indicator remains near its highest level this year.
In finance, the Wyckoff Method suggests that accumulation is followed by the markup phase where demand is usually higher than supply.
Ethereum ETF approval
The next potential catalyst for the price of Ethereum is that the Securities and Exchange Commission (SEC) has given the green light for spot Ethereum ETFs. It did that by approving three ETFs last month and is continuing to review more.
In a recent statement, the SEC Chair, Gary Gensler, noted that the agency would likely complete the review of the other ETFs either in Q2 or Q3.
As such, such approval will likely lead to more accumulation at a time when Ethereum balances have crashed hard as shown below. As we saw with Bitcoin (BTC), the price will likely rise when the funds are approved and start trading.
ETH price double-bottomed
There are also signs that the token will rebound now that it has formed a small double-bottom pattern at $3,362. In most cases, a double bottom is one of the most bullish chart patterns in the market.
Most importantly, the chart shows that this bottom happened at the same price as the 100-day Exponential Moving Average (EMA). That is a sign that bears are a bit afraid of shorting below that level.
Also, as shown, the accumulation and distribution pattern has remained at an elevated level despite the recent sell-off.
Ethereum's ecosystem is booming
Finally, there are signs that Ethereum’s ecosystem is doing well even after the robust Solana competition. Ethereum’s Decentralized Finance (DeFi) ecosystem still has over $110 billion in total value locked (TVL), 13 times bigger than Solana’s $8.6 billion.
Uniswap remains the biggest decentralized exchange (DEX) in the world while Lido is the biggest staking platform. As a result, Ethereum’s network has continued to make more money than other platforms. It has made over $1.62 billion in fees this year, much higher than Tron’s $721 million. All this means that Ethereum still has strong fundamentals.
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