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Ethereum Bound For Correction After Being Overbought

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Ethereum Block Rewards Reduced By 25% Post Muir Glacier
Ethereum Block Rewards Reduced By 25% Post Muir Glacier

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Ethereum has seen a very bullish price action. However, this comes in spite of weak on-chain metrics. Should this trend continue, ETH has only one choice: Experience a steep correction.

Massive Price Hike A Bad Sign

Ethereum managed to make headlines after it finally broke free of its two-month stagnation period.  The smart contracts giant managed to shoot up by 40% after its breakout point was breached, and managed to top the peak seen in mid-February. Ether’s bullish momentum saw the price go to a new yearly high, clocking in at $335.

Ethereum saw a massive increase in mentions across all forms of social media, as well. Santiment, through its Social Volumen index, recorded an impressive 3,700 mentions of it within 24 hours. This stands as the highest activity in social engagement it’s recorded since the market went belly-up back in March.

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Social Media Presence Heralds Bearish Prices

The world’s second-largest cryptocurrency, by market cap, actually sees a large amount of chatter as a negative indicator. This chatter, more often than not, simply leads to a steep correction. This comes from the Head of Content and SEO of Santiment, Dino Ibisbegovic.

Ibisbegovic stated that extreme volumes in social activity indicate peak hype, more often than not, noting this is especially so during a rally of the coin. It also signifies an almost irrational confidence in the short term potential of the currency within the market. Through recent studies, Ibisbegovic highlighted that 200 instances were analyzed during social “peaks” among different coins. More often than not, he said, this has an adverse impact on the short-term performance of the coin.

A Coin Pushed To Its Limit

It seems that this will be the case, as Ethereum has been pushed to exhaustion, all the while investors are showing extremely bullish sentiment with the sheer upward pressure. While Ether managed to recover some of its losses it’s felt, indicators show that a steeper decline is all but inevitable.

On the 1-day chart of the TD sequential indicator, a sell signal is being presented for ETH. This is brought forward thanks to a green nine candlestick, which is a technical pattern suggesting one to four candlesticks’ worth of correction before the uptrend starts to resume.

Historically speaking, the TD setup has been rather accurate when it comes to Ether’s trends, predicting local tops and bottoms. The thing even showed a buy signal on the 18th of July, before this bull rally began. As such, the forecast given now needs to be taken seriously, despite the downward pressure presented.

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