Ethereum price continues to weaken after losing key value levels

Ethereum price weakness builds as bearish structure targets new yearly lows

A recent technical breakdown shared by crypto analyst Trader Tardigrade added 
a notable outlook to the discussion of how fast Ethereum can enter into a bull 
run or if there’s more consolidation ahead. In his post on X, he compared 
Ethereum against the US Dollar Index and then consulted Perplexity AI for a 
data-backed explanation of the relationship. The result was a match of DXY 
peaks and Ethereum bottoms, pointing to a recurring inverse pattern that may 
now be coming back into play. Ethereum’s Volatility Tied To The Dollar Index 
The technical analysis from Trader Tardigrade focuses on the inverse 
relationship between Ethereum and the US Dollar Index (DXY). Ethereum&#8217;s 
monthly candlestick price chart shows that the price structure is layered 
against DXY movements, with four major phases where peaks in the dollar 
coincided with Ethereum cycle bottoms and the reverse dynamic played out as 
well. Related Reading: Dogecoin’s Third Time Breakout Could Send Price On 
2,000% Rally To $2 A quick look at the chart shows that downtrends in the DXY 
have, more often than not, coincided with uptrends in the Ethereum price. 
According to explanations by Perplexity AI, ETH has one of the clearest 
inverse relationships to DXY in the crypto market, in some cases even more 
pronounced than Bitcoin. Whenever the dollar is strengthening, capital rotates 
to perceived safe assets, and risk assets such as Ethereum face selling 
pressure. On the other hand, when DXY weakens, liquidity conditions ease, and 
this encourages inflows into cryptocurrencies like Ethereum. According to the 
analyst, DXY has now broken down from long-term support and looks ready for 
further declines. The DXY is currently at 97.8 and weakening. That could spark 
a major rally in crypto in the coming weeks, especially ETH. Chart Image From 
X. Source: @TATrader_Alan On X AI Breakdown: How Much Of ETH’s Moves Does DXY 
Explain? In the AI-backed explanation, Perplexity pointed out that the inverse 
correlation between ETH and DXY can account for roughly 40% to 60% of 
Ethereum’s volatility, particularly during periods of changes in monetary 
policy. That figure is always more significant during rate hikes and news 
events, although there are lags of days to months depending on the catalyst. 
Related Reading: Mapping Out XRP’s Path To $1,200: Analyst Shares Insights The 
historical table referenced in the analysis linked specific DXY highs to ETH 
turning points. For example, during the March 2020 dollar spike, Ethereum 
bottomed before staging a multi-month rally as the DXY continued to fall to 
89. Another alignment was observed in 2022 when the dollar topped at a multi- 
year high during a broader risk-asset capitulation phase. This, in turn, led 
to Ethereum creating a bear market low. If the current DXY breakdown extends, 
then it could begin to favor inflows into Ethereum again. The green projection 
arcs on the chart suggest that a sustained dollar decline may open the door to 
another expansion phase in ETH, where the price expands above $10,000. In 
order for Ethereum to rise above $3,000 again, there would need to be 
confirmation of sustained dollar weakness with improving on-chain and 
derivatives metrics. Featured image created with Dall.E, chart from 
Tradingview.com

AI Explains What’s Driving The Ethereum Price Volatility, Can It Rise Above $3,000 Again?

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