Key Points
- Ethereum has seen two significant waves of profit-taking in the past month, casting doubts on a potential rally.
- The Ethereum whales have increased their holdings, while retail investors seem eager to sell.
Ethereum experienced two considerable profit-taking waves in the previous month, which raised questions about a possible rally.
The Ethereum whales have been expanding their holdings, with retail investors showing a tendency to sell.
Resistance and Upgrades
Over the weekend, Ethereum was denied at the $3360 resistance level, indicating a short-term bearish sentiment.
In other news, the recent Dencun upgrade was successful, enabling L2 solutions to achieve low gas fees.
The developers’ next aim is called Prague. Despite the positive news, on-chain metrics revealed a lack of confidence among market participants.
Market Movements
An analysis of the supply distribution revealed that nearly every wallet holding between 1 and 100k ETH has been selling in recent months.
Micro wallets with less than 0.1 Ethereum were the ones buying, hoping for a rally following Bitcoin’s halving.
Historically, when the 100k-1 million token holder cohort increased their stash, it occurred during a market rally. Sometimes it preceded a significant retracement, as it did in mid-January.
The second half of April saw this cohort quiet down, neither increasing nor decreasing their supply.
The 1 million- 10 million cohort saw a sharp increase in early March. Since then, they too have been quiet. Together, these movements suggest that large participants expect bullish sentiment in the coming months.
A sharp increase in the 100k- 1 million holders’ supply could be beneficial for traders to identify local tops and imminent retractions.
The network realized profit/loss (NRPL) increases during periods of rapid price appreciation as profits accumulate. The first two weeks of March saw strong price rallies alongside NRPL spikes, indicating profit-taking activity.
However, the NRPL has been trending downward since then. It experienced occasional spikes, such as in late March and mid-April, each smaller than the last, showing participants were keen on booking profits even though the price was just above the $3k support zone.
This demonstrated a lack of faith, which is part of the extended retracement Ethereum has witnessed in the past two months.
On the other hand, the mean dollar invested age (MDIA) has trended strongly higher in the past month. This metric shows that the asset is in an accumulation phase once again.
It fell sharply during the rally to indicate holders were realizing profits en masse.
In the past month, the HOLDer sentiment has been stronger than the collective urge to book profits.
The metrics showed both fear and hope were present in the market, but long-term investors have more reason to hold on than to sell.
