These 4 metrics suggest Ethereum price is sinking toward $2,300

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As a seasoned researcher with years of experience in the cryptocurrency market, I have witnessed numerous price fluctuations and trends that have shaped the landscape of this dynamic industry. The recent resistance faced by Ether’s price at $2,768 is a classic example of how various factors can influence the market, from supply and demand to technical indicators.

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After reaching $2,768 on October 21, the cost of Ether encountered resistance. Numerous aspects limited its upward momentum, such as an increase in supply available on exchanges, diminished network activity, and deteriorating technical factors.

ETH Coinbase index signals potential sell-off

The decrease of 6.5% in Ether’s (ETH) price from its peak at $2,768 led to a drop in the ETH Coinbase Premium Index below its 14-day moving average on October 21, suggesting a possible upcoming sell-off.

The ETH Coinbase Premium Index, which signifies the difference in Ether’s price on Coinbase Pro versus Binance, serves as a tool for gauging American investor interest relative to global investment trends.

The graph demonstrates that drops in the Ethereum (ETH) price usually happen when the Coinbase Premium Index dips below its moving average over a 14-day period.

At present, the indicator stands at -0.075, while the 14-day Simple Moving Average (SMA) is at -0.040. This suggests that “there is more selling pressure than buying in the U.S. market,” according to CrypptoQuant’s analysis.

“ETH Coinbase Premium Index crosses below its SMA14, this signals increasing US selling pressure, potentially leading to price declines.”

Increasing ETH supply on exchanges

Another argument for the bears is the increasing ETH supply on exchanges. According to additional data from CryptoQuant, Ether balances on exchanges reached a four-week high of 15.8 million ETH on Oct. 21.

Between October 15th and October 20th, there was a significant rise in the net balance (incoming transactions minus outgoing transactions) within centralized exchange wallets. This increase coincides with a spike in deposits being made to these trading platforms.

A rise in the Ethereum supply held on exchanges might signal that investors are transferring their tokens from personal wallets to those managed by exchanges, potentially suggesting they plan to sell.

Ethereum’s decreasing TVL

Since mid-June, the overall value held within Ethereum’s smart contracts, often referred to as Total Value Locked (TVL), has shown a downward trend, as suggested by the graph provided by DefiLama.

The TVL on the layer-1 network fell from a year-to-date peak of $66 billion on June 3, dropping 57% to $42.3 billion on Aug. 5, before rising to the current level of $48 billion. 

Information from DefiLlama indicates that Ethereum’s Total Value Locked (TVL) has dropped by more than 2% in the past 30 days, while it has been outperformed by other leading layer-1 protocols like Solana. In contrast, Solana has experienced a significant surge of 22% in its TVL during the same timeframe.

The rising TVL reflects traders’ interest in Ethereum’s DeFi ecosystem and shows the network’s inability to attract new users because of its relatively higher transaction costs, particularly those seeking to launch new projects.

Data from Etherscan shows that Ethereum’s fees remain consistently high, at an average of 11.492 gwei ($0.62). This is considerably higher than transaction fees on Solana, which currently stand at an average of 0.000091 SOL (~$0.015). 

Ether’s bearish pattern hints at 10% drop ahead

Over the past two weeks, as a crypto investor, I’ve noticed a captivating inverted V-shaped pattern emerging on ETH’s daily chart. This pattern follows an impressive 19% climb in Ether’s price, which started from $2,327 and escalated sharply. However, this surge was halted by a significant cluster of buyers around the psychologically significant $2,800 level.

Bears have realized gains during this market surge, leading to a significant decline in prices. As the price attempts to finish the reversed V-pattern, it may decrease by an additional 9.7% from its current value, potentially reaching the pattern’s neckline near the $2,300 support area.

Over the past three days, the Relative Strength Index (RSI) has been on a downward trajectory, dropping from 67 to 52. This shift indicates that the market trend might be leaning towards a decrease in prices.

Positively speaking, two important points to keep an eye on are the 200-day Exponential Moving Average around $2,660 and, in due course, the recent peak price at $2,768.

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2024-10-23 17:10