Stay Alert, Ethereum Traders: Key Level to Watch for to Avoid Future Price Drops!
While Bitcoin [BTC] faced a downturn in the past week, Ethereum [ETH] followed a different trajectory, managing to secure modest gains on its monthly price charts.
Presently, the trading price of Ethereum stands at $2,404. This signifies a 1.06% increase on the weekly charts, with the altcoin also making progress on the daily charts.
Despite these advances, ETH remains notably lower than its recent peak of $2,700, standing at 50.7% away from its all-time high (ATH) of $4878. These market conditions have spurred discussions among analysts, with one prominent crypto expert, Ali Martinez, pointing out that $2,300 serves as a critical support level for Ethereum.
Significance of 2.4 million Addresses
Martinez emphasized the importance of 2.4 million addresses that acquired 52.6 million ETH tokens at $2,300. According to his assessment, it is imperative for ETH to maintain levels above this point, as it holds paramount significance as a support level for the altcoin.
If Ethereum fails to uphold this particular zone, there is a high risk of a substantial sell-off. A breach beneath this level could trigger panic selling among investors aiming to mitigate their losses.
In such a scenario, Ethereum will face intensified selling pressure, potentially causing a further decline in prices.
Interpreting ETH’s Chart Data
While Martinez’s analysis hinted at a probable market downturn, it is crucial to cross-reference with other market indicators to gain a comprehensive perspective.
For instance, Ethereum’s Exchange Supply ratio saw a surge over the previous week, rising from 0.143 to 0.1443. This escalation in the exchange supply ratio suggests that holders are gearing up to trade or secure profits.
Typically, this trend signals a bearish sentiment as investors shift their ETH from personal wallets to exchanges.
Furthermore, Ethereum’s Exchange Reserve has exhibited an upward trend throughout the week, reaching levels of $18.7 million at the current time. This increase in exchange reserves aligns with the spike in the exchange supply ratio, reinforcing the notion of investors transferring their Ethereum to exchanges.
Such market dynamics could trigger selling pressure, potentially driving prices downwards.
Lastly, Ethereum’s MVRV long/short difference has remained in the negative territory for the past month. In situations where long-term holders face losses while short-term holders are in profit, it often leads to long-term holders capitulating. This could intensify selling pressure as they strive to minimize their losses.
Consequently, the capitulation of long-term holders often marks a temporary bottom as they close their positions, heightening the risk of pushing prices lower in the short run.
In summary, as per an analysis by CryptoCrypto, Ethereum has been navigating a descending channel spanning several months. Combined with prevalent negative market sentiment, Ethereum might observe a decline before a potential breakout from this pattern. In the event of a retracement, ETH is likely to find support around $2,325.