Ever since Ethereum touched the $4,000 price point, it has been on a downward trend, dropping as low as $3,000. While Bitcoin has been making remarkable gains in January, Ethereum has been battling, hitting repeated lower lows during this period.

However, CryptoQuant market analyst Crypto Sunmoon has observed a rise in market buying volume amidst the current price dip. This indicates a bullish divergence in the ETH market, where the asset’s price is hitting lower lows while momentum indicators show higher lows, a sign of potential reversal or upward movement.

In the case of Ethereum, the increased buying volume amidst falling prices signals a robust demand from buyers, especially at the current price levels. This suggests strong faith in the asset’s profitability, as investors anticipate that buying pressure will exceed selling activity in the upcoming days.

Drawing from historical data, Crypto Sunmoon anticipates that Ethereum may witness a price surge similar to that of May 2024 when a comparable bullish divergence was recorded. During that time, ETH saw an over 21% rise, hinting that the altcoin could likely rebound to $4,000 if the predicted price breakout takes place, based on current market prices.

In related news, IntoTheBlock reports that long-term Ethereum holders currently have an average holding time of 2.4 years, indicating immense confidence in Ethereum’s future value potential. Despite this, Ethereum is facing several challenges, including a lack of short-term participants which hampers ETH from experiencing significant speculative trading that could boost price appreciation.

The fast-paced growth of layer 2 solutions like Optimism, and layer 1 blockchains like Solana, are also impacting the potential market demand and attention for Ethereum. As of now, ETH is trading at $3,306 after a 1.86% gain over the past day. The asset’s daily trading volume has soared by 55.69% resulting in a value of $30.3 billion. Over larger time frames, Ethereum has risen by 0.22% on its weekly chart but has dropped by 2.27% on its monthly chart, leaving a lot to be desired by many short-term investors.

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