Ethereum Price Analysis: 3% Drop Could Push $800M Worth of ETH Underwater

Ethereum price has been volatile for the last few weeks, creating optimism and fear among market participants. The asset recently grazed $3,600 before retracing down and settling near a zone of major support. The market remains uncertain about the next price movement. On-chain analysis reveals over $800 million worth of ETH could go underwater if the asset loses its current support. Technicals suggest mixed sentiment with a slight bias to the downside.

Ethereum Price Wants to Go Lower

ETH price is currently trending from neutral to bearish. The price is moving within a descending triangle pattern and is currently trading near the lower boundary. 

The price of ETH is also below the 50-day EMA (green line) and slightly above the 200-day EMA (black line), indicating mixed sentiment with a slight bearish bias.

Additionally, recent candlestick patterns indicate indecision in the market, with mixed small-bodied candles showing a lack of clear directional momentum. There is potential for a significant move upon a breakout from the descending triangle pattern.

Ethereum’s price has key support levels of around $3,130 (200-day EMA), and the gray-shaded area is around $3,000, which has acted as a significant support zone in the past.

On the flip side, the price of ETH faces a couple of resistance levels of around $3,332.12 (50-day EMA), and the upper boundary of the descending triangle around $3,600.

The Relative Strength Index (RSI) is currently at 49.18, indicating a neutral position and no clear overbought or oversold condition. This suggests a potential for movement in either direction, further adding to the mixed sentiment. The Chaikin Money Flow (CMF) is at 0.07, indicating a slight positive money flow, but not strong enough to suggest significant bullish momentum.

The trading volume is relatively low, indicating a lack of strong buying or selling interest. A spike in volume would be necessary to confirm any breakout from the current pattern.

Ethereum price forecast shows the the prevailing trend is currently bearish. However, if price can bounce from the 200 EMA and breakout above $3,600, it would signal market strength, turning the asset bearish and invalidating the bearish thesis. The next targets for ETH price would be $3,800 and $4,000.

ETH On-Chain Analysis Reveals More Downside Probable

Data from Coinalyze shows Ethereum open interest (OI) dropped 2.66% in the last 24 hours. Open interest shows the total open contracts on an asset and it increases when a new contract is added (whether Long or Short). Combined with the decreasing price, it signals ETH price may drop even lower.

This is worrisome because, according to Break Even Price (BEP) data from IntoTheBlock, which shows the price that the asset would need to reach for an address to break even, over 258,000 ETH (~$800 million) could be in jeopardy if Ethereum price falls below $3,065.

Additionally, CryptoQuant data shows Ethereum exchange reserves increased by 0.44% in the last 24 hours and 0.76% in the last 7 days. As the exchange reserve continues to rise, it indicates higher selling pressure. CoinGecko shows 24-hour trading volume for Ethereum is down 3%. Coupled with falling prices, it cements the bearish outlook.

An increase in Ethereum volume and open interest would turn the tide for the asset, as it would signify increasing market strength. 

Frequently Asked Questions (FAQs)

1. What is the current trend for Ethereum's price?

Ethereum's price is trending from neutral to bearish. It's moving within a descending triangle pattern and is currently trading near its lower boundary, with mixed sentiment indicators.

2. What indicators suggest Ethereum might drop further?

Decreasing open interest, rising exchange reserves, and declining trading volume all suggest potential further downside for Ethereum's price.

3. What would change the bearish outlook for Ethereum?

A significant increase in trading volume and open interest, or a breakout above $3,600, could signal a shift in market strength and potentially invalidate the current bearish outlook.

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Evans Karanja

Evans Karanja is a crypto analyst and journalist with a deep focus on blockchain technology, cryptocurrency, and the video gaming industry. His extensive experience includes collaborating with various startups to deliver insightful and high-quality analyses that resonate with their target audiences. As an avid crypto trader and investor, Evans is passionate about the transformative potential of blockchain across diverse sectors. Outside of his professional pursuits, he enjoys playing video games and exploring scenic waterfalls.

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