Ethereum has held a valuation above $ 3,000 since August 7. It is a strong indication of a bull market and, in the long term, it should become a turning point. However, each cycle needs its correction period and, at this time, the main assets are indicative of such a change.
However, we want to analyze Ethereum regardless of its performance over the past 2 weeks. The market seems overheated, but we would be looking at the current signals that indicate a decline and not the price position itself.
$ 3300- $ 3400 history range
Between $ 2800- $ 3000, Ethereum broke through its main resistance, which was of the greatest importance for a prolonged bullish effort. Once that range recovered, general doubts about a continued bearish rally were resolved. At the moment, the possibility of a correction increases due to the range that Ethereum has ahead. During an up and down move, this longer-term resistance range of $ 3300- $ 3400 saw significant activity.
With Ethereum consolidating just below that range, the possibility of a pull-down increases as there are a couple of key differences between the two time frames.
The transaction rate does not match the previous average
According to the glass node, the transaction count for Ethereum has not recovered the levels observed during March-April-May. Instead of a steady increase, there has been stagnation, indicating moderate chain activity. Note that the previous rally facilitated higher transaction fees.
Furthermore, glassnode’s ETH HODL waves also signified a major disruption.
Now, regarding long-term hodlers (LTH), their supply remained constant, but for the last few weeks, STH’s supply has declined sharply. As observed, the red and orange zones, which signify holders of 1d-1w and 1w-1 month, have decreased. So there is definitely a lack of retail investors right now. New investors have not entered the space and the rally is possibly supported by LTH.
There are two lines of thought in this market structure. Now the LTH backing the rally is fine, but the LTHs don’t trigger strong moves on the charts. And with the absence of retail, this rally is likely weaker than April, as it has been sparked by speculation and hype.
What is the best scenario for Ethereum?
Right now, the best scenario is obvious; $ 3400 default. But it would likely lead to a massive market explosion at the top, leading to extensive bleeding later on. Structurally, Ethereum should retest between $ 2,800 and $ 3,000 at least once, before moving forward.
This is a machine translation of our English version.
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