Ethereum (ETH), the second-largest cryptocurrency by market capitalization, has experienced a decline that triggered a significant Ethereum oversold signal on its daily chart, a technical event not observed since the asset was trading at $1,400. According to data from the technical analysis platform TradingView, the daily Relative Strength Index (RSI) fell below the 30 threshold, indicating a possible seller capitulation and drawing the attention of analysts and investors alike.
The main catalyst for this drop appears to be the recent decision by the U.S. Securities and Exchange Commission (SEC) to delay its verdict on the spot Ethereum exchange-traded fund (ETF) proposed by Franklin Templeton. This news injected uncertainty into the market, prompting a sell-off that pushed the price of ETH to test key support levels. Consequently, the daily RSI, a momentum oscillator that measures the speed and change of price movements, entered into oversold territory. An RSI below 30 suggests that an asset may be undervalued and could be poised for a price rebound.
Historical Context: A Signal for a Potential Rebound
The significance of this Ethereum oversold signal lies in its rarity and its historical precedent. The last time Ethereum’s daily RSI fell to these levels was in June 2022, when the asset’s price was struggling around $1,400 before beginning an eventual recovery. Historically, for major digital assets, such a low daily RSI has been a precursor to medium-term price recoveries, as value buyers often view these conditions as an attractive entry opportunity.
However, analysts caution that an oversold signal does not guarantee an immediate price reversal. An asset can remain in oversold conditions for an extended period if negative macroeconomic sentiment persists. For traders, the event underscores the importance of monitoring key support and resistance levels. Currently, the $2,850 area is considered crucial support, while resistance is found near $3,350. The price’s ability to hold above support will determine whether this signal translates into a sustainable bounce.
While the Ethereum oversold signal is technically a constructive indicator for the medium term, short-term volatility is likely to continue. The market is now awaiting further regulatory clarity on spot Ethereum ETFs. The price reaction in the coming days will be critical to confirm if buyers have enough strength to capitalize on this rare market condition, even as regulatory uncertainty remains on the horizon.
