Key Points
- Ethereum [ETH] is experiencing increased bearish sentiments and could fall below the $3k support zone.
- Despite strong buy signals, other metrics indicate caution may be beneficial for investors.
Ethereum [ETH] has been dealing with growing bearish sentiments recently. A Santiment post on X (previously Twitter) unveiled that both Bitcoin [BTC] and Ethereum saw a rise in bearish posts prior to the halving event.
On 18 April, both BTC and ETH experienced a positive change in social media engagement. BTC bounced to $64.1k and ETH to $3,094. However, other metrics suggest that it might not be the best time to invest in ETH.
Declining Open Interest and Average Fees
The Open Interest for Ethereum has seen a significant drop over the past ten days. It plummeted from a high of $7 billion on 9 April (with ETH priced at $3638) to $4.6 billion (ETH priced at $2997).
This sharp decrease in OI indicates that speculators are hesitant to go long and lack bullish conviction, suggesting a bearish sentiment. The 1-day RSI has also been mostly below the neutral 50 since 18 March, suggesting that sellers have had the upper hand for a month.
The average fees on the network have also been decreasing. Although this is good news for users, it also suggests a decrease in demand for transactions on the blockchain.
Investor Signals and Market Conditions
A month ago, the $3k psychological support zone would have been a great buying opportunity. It still might be. The 90-day MVRV ratio was below zero at press time, indicating an undervalued asset and holders at a loss.
However, the mean coin age has been stubbornly trending upward for three weeks. These factors together signal investors to buy Ethereum.
On the other hand, dormant circulation saw a significant spike on 18 April. This could indicate a wave of token movements and potentially a wave of selling. Furthermore, Bitcoin was barely holding onto the $61k support zone at the time of writing.
Investors may benefit from patience and prudence. The likelihood of another sell-off is still high. The possibility of another month or two of consolidation following the halving, given recent overheated market conditions, is also high.
