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Ethereum’s (ETH) recent sell-off has led to a significant loss of the crucial $1,500 support level, raising concerns among investors and analysts about the potential for a deeper correction. As Ether’s price hovers below its realized price — an on-chain metric that calculates the market value based on the price at which each coin last moved — technical indicators suggest that ETH might experience further price declines before any sustained recovery.
According to CryptoQuant analyst, theKriptolik, ETH trading below the realized price is historically a bearish signal. This scenario has been observed during previous market downturns, such as the Terra Luna collapse in June 2022 and the FTX fallout in November 2022, both of which preceded major price drops. When ETH trades below the realized price, it often signals a “capitulation phase,” where investors lose confidence and begin to sell off their holdings in large quantities.
In addition to this bearish technical outlook, Ethereum’s Spot ETF products continue to see outflows, with $3.3 million withdrawn on April 8 alone. Over the last two weeks, Ethereum ETFs have experienced a staggering $94.1 million in outflows compared to only $13 million in inflows. This weakness in institutional investment is concerning, especially since institutional demand has been a key driver of Ether’s price gains earlier in the year.
Further compounding Ether’s struggles are the subdued conditions in the derivatives market. Ethereum’s open interest, which reflects trader participation in futures and options contracts, has dropped by 48% from its peak earlier this year, signaling a lack of investor confidence. Additionally, negative funding rates in Ether’s perpetual futures markets indicate that bearish sentiment is overwhelming the market, with traders betting against Ether’s price.
Ethereum’s network activity is also showing signs of weakness, with a significant decline in unique active wallets (UAW) and transactions on the platform. As users migrate to competing blockchains like Solana, BNB Chain, and Avalanche, Ethereum risks losing market share in the layer-1 blockchain race.
Also Read: Ethereum Whale Dumps $16.8M in ETH as Analysts Spot Bullish Reversal Signals
Given these factors, the technical setup suggests that Ether’s price could potentially bottom at $1,000, but a sustained recovery seems unlikely without a shift in sentiment and market conditions.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
