Understanding the Warning Signals in Ethereum Price as Reflected by Coinbase Premium
Over the past month, Ethereum [ETH] has experienced a decline of 12.44%, while Bitcoin [BTC] has seen losses of 4.74% during the same period. ETH has been facing challenges in maintaining crucial support levels for the past six weeks, particularly struggling around the $3k mark, which has led to mockery among ETH holders and enthusiasts.
Despite the prevailing bearish outlook, there has been a continued accumulation by whales. The recent $30 million withdrawal from Binance did not accurately represent the overall market sentiment, with various price indicators signaling more bearish tendencies than bullish ones.
A recent observation shared by crypto analyst Ali Martinez on X highlighted a slowdown in network growth. The 7-day NA showed a decrease of 9.32% in new addresses, suggesting a decline in adoption and interest from newcomers in the network. However, the 7-day active address change indicated a positive swing of 7.7%, signaling reduced new entries but increased trading and network activity.
Impact of Coinbase Premium
Looking at a broader timeline, the Coinbase Premium has predominantly been in negative territory over the past month. This metric, which compares Ethereum prices on Coinbase and Binance, offers insights into the behavior of U.S.-based investors. The negative premium on Coinbase suggests higher selling pressure and lackluster buying interest from U.S. traders, reflecting a cautious stance towards ETH.
Analysing the price action over the last two months reveals a pattern of caution and a considerable inclination towards selling ETH. Following a range formation in early December, ETH experienced a downtrend as BTC plummeted from $108k to $92k. While BTC was at $96.5k at the time of writing, ETH recorded lower lows and traded just below $3.2k.
Current Scenario and Future Outlook
The On-Balance Volume (OBV) has been indicating persistent selling pressure since December through a series of lower highs, while the Relative Strength Index (RSI) has been confirming the prevailing bearish momentum.
As of now, the crucial resistance zone at $3.4k must be reclaimed for swing traders to shift to a bullish stance regarding Ethereum’s price direction.