Ethereum (ETH) has been on a wild ride the past week, dashing the tentative optimism that emerged in late July. After a mostly bullish July, a brutal wave of sell pressure sent ETH plummeting for seven consecutive days, resulting in a staggering 36.59% decline. This rapid descent mirrors the one witnessed during the FTX collapse of June 2022. As of press time, ETH sits precariously at $2,277, raising concerns about further downside in the coming weeks.
However, amidst the bearish sentiment, there are glimmers of hope for a potential Ethereum recovery. The Relative Strength Index (RSI) suggests the price may be oversold, potentially signaling an attractive entry point for some investors. Additionally, the recent sell-off retested a crucial ascending support level, triggering some accumulation and a 5% rebound from that point.
Ethereum exchange flows present another intriguing wrinkle. The past 24 hours saw the highest daily outflow of ETH from exchanges in the last 30 days, exceeding 501,000 ETH. While this coincides with the highest daily inflow of 446,877 ETH during the same period, the outflow translates to a $119 million net difference, potentially indicating a rise in demand for discounted ETH. This suggests that if the selling pressure subsides, a significant bounce back for ETH could be on the cards.
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On the flip side, derivatives data paints a picture of intense selling pressure. The past 24 hours witnessed record levels of long liquidations on ETH, reaching a staggering $141.2 million. This, coupled with minimal short liquidations of $35.5 million, implies margin calls forced leveraged long positions to close, contributing to the recent volatility and decline. With the market now potentially deleveraged, some volatility reduction is expected.
However, the future path of ETH hinges on external factors. Whether renewed buying interest emerges or the selling pressure continues will largely depend on broader market conditions. Investors are closely monitoring these developments to gauge the possibility of a sustained recovery or a further descent for Ethereum.
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.
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