Key Points
- Ethereum’s price has been steadily declining, breaking through crucial support levels.
- Significant inflows to exchanges suggest a trend of traders selling off the altcoin.
Ethereum has recently experienced a significant drop in its trading session, causing its price to fall under key support levels. This could be interpreted as a bearish signal, potentially leading to panic selling. If Ethereum holders at these levels begin to panic and sell, it could intensify the decline, triggering a downward spiral.
Ethereum’s Downward Trend
A look at Ethereum’s price trend on the daily timeframe shows a notable downtrend over the past four days, with the most substantial drop occurring on August 2. On that day, its price fell by 6.71%, dropping from around $3,200 to roughly $2,985. Over the past four days, the total decline has exceeded 10.5%, with the most recent session contributing significantly to this downturn.
While Ethereum’s support level was around $3,200, this threshold was breached following its recent market movements. The latest support region can now be identified between $2,900 and $2,700. Additionally, analysis shows that the Relative Strength Index (RSI) was around 34. This value indicates a strong bearish trend, as RSI levels below 30 are considered oversold. The break below a key support level could lead to further declines if the new support zones fail to hold.
The Impact on Ethereum Holders
The recent decline in Ethereum’s price has significantly impacted its holders’ profitability, as shown by data from IntoTheBlock. Previously, the $3,000-mark was a crucial support level, with over 1.7 million addresses having bought Ethereum below this price. However, with the current market downturn, this number has decreased.
According to IntoTheBlock, approximately 15.12 million Ethereum addresses were “out of the money” at the time of writing, meaning the current price of Ethereum was lower than the price at which these coins were bought. This accounted for over 64% of all Ethereum addresses. On the other hand, about 8.08 million addresses remained “in the money,” representing 34.51% of holders. These addresses acquired their Ethereum holdings in the price range of $2,600 to $2,900.
This situation puts Ethereum’s market in a precarious position. The holders “in the money” are at a critical juncture, as their holdings are still profitable but nearing the lower purchase price threshold. If these holders start to panic sell, fearing further losses, it could trigger a cascading effect, pushing the price of Ethereum down even more sharply.
Ethereum Netflows
Recent data analysis of Ethereum’s netflows from CryptoQuant showed a significant trend of inflows to exchanges. There were positive netflows of nearly 53,000 on August 1 and almost 19,000 on August 2. This suggested that Ethereum worth approximately $216 million was moved to exchanges during the first two days of this month alone.
Such substantial inflows to exchanges imply that many traders chose to sell off their holdings. This move is likely an attempt to capitalize on current market prices or to cut losses. This sell-off has added selling pressure to the market, which can contribute to a downward price spiral.
For Ethereum’s price to stabilize, there needs to be a reversal in this trend of net inflows to exchanges.
