While the price of Ethereum [ETH] is currently experiencing a downward trend, the increasing levels of buying activity paint a contrasting picture. Despite the drop in price, the heightened market activity reflects familiar patterns observed prior to major price spikes, such as the surge witnessed in May 2024.
Traditionally, elevated buying volumes during a price downturn often signify accumulation, suggesting that investors may be preparing for a potential breakout. Could this indicate a period of stability before a surge for Ethereum?
Price Decline Coupled with Growing Buying Volumes
An analysis of Ethereum’s taker buy volume – a measure tracking the volume of buy orders executed at market price – across all exchanges, juxtaposed with its 100-day simple moving average, reveals interesting insights.
Despite Ethereum’s price dropping by 11% from $3,750 in early January to $3,350 at the time of writing, the taker buy volume has seen a significant increase, indicating a surge in market activity.
This current trend is reminiscent of the accumulation phase observed in May 2024, as depicted in the chart. During that period, taker buy volume surpassed its 100-day SMA amidst a price correction, foreshadowing a substantial 27% recovery to $4,750. A similar pattern may be emerging now, with taker buy volume crossing the $4 billion mark while the SMA continues its upward trajectory.
Throughout history, such divergences between price movements and buying volumes typically point towards institutional accumulation or strategic positioning by significant holders. Could this possibly herald the onset of another accumulation-driven rally for Ethereum?
Historical Trends
A dive into Ethereum’s past price movements unveils a recurring cycle – instances where price declines coincide with growing buying volumes often precede notable surges. A standout event occurred in December 2024 when Ethereum’s price dipped to approximately $2,500. Despite the decline, taker buy volume surged across exchanges, indicating accumulation by investors anticipating an upswing.
This period of accumulation culminated in a rally that propelled the price to around $3,700 in early 2025.
Similarly, in May 2024, despite a price dip, heightened buying activity led to a subsequent price upsurge. These patterns suggest that increasing buying volumes during price declines could be indicative of potential upward movements.
If this trend persists, it might signify an imminent rally, reminiscent of historical instances where a surge in buying interest during downturns preceded significant price recoveries.
Ethereum’s Near-Term Prospects
Presently, Ethereum’s weekly chart shows the price consolidating near $3,228 – slightly above the crucial support level of $3,000. The RSI indicates neutral momentum with no clear indications of overbought or oversold conditions.
This suggests uncertainty among market participants, yet leaves room for potential upside if buying pressure intensifies.
The OBV remains stable, reflecting consistent accumulation rather than distribution. This aligns with the previously observed rise in taker buy volumes, indicating accumulation by major investors.
If Ethereum manages to hold the $3,000-support level, a bounce towards the $3,500 – $3,600 range seems plausible. However, a failure to sustain this level could trigger a deeper correction towards the $2,800 mark, heightening bearish sentiment.