Ethereum surged to $2,684, but now faces potential selling pressure.
Increased exchange deposits signal profit-taking and potential price correction.
Ethereum surged to a 16-day high of $2,684, bolstered by a wave of bullish momentum over the past week, gaining 8%. The rally mirrors Bitcoin’s recent rise above $68,000, pushing Ethereum to peak levels. However, as of today, Ethereum has pulled back slightly, trading at $2,623, with new signs indicating possible downside risks.
On Monday, Ethereum broke through the significant resistance level at $2,579, causing older, long-dormant coins to re-enter the market. Data shows a surge in activity from long-term holders, who have started moving their holdings, with the age consumed metric skyrocketing by over 400%. This renewed activity suggests that many investors are now seeking opportunities to take profits.
However, a notable increase in Ethereum’s netflow to exchanges suggests that a significant portion of these moved coins is being sent to trading platforms. This shift in activity often precedes heightened selling pressure. It is as investors typically transfer assets to exchanges when they are preparing to sell. Over 51,000 ETH, worth more than $135 million, was transferred to exchanges on Monday, highlighting this trend.
If this selling pressure continues to build, Ethereum’s price could face a correction, potentially falling toward the $2,579 support level. Should this level fail to hold, Ethereum could experience a further decline to around $2,320, representing a 10% drop from current prices.
Investors To Remain Cautioned?
Additionally, a rise in Ethereum’s exchange supply and reserve levels points toward increasing investor caution, as more ETH is being deposited into exchanges, likely in preparation for sales. This could result in a further price dip if the trend intensifies. Long-term holders, currently facing losses, may contribute to the pressure as they seek to minimize risks.
In conclusion, while Ethereum’s recent rally has been strong, rising exchange activity and profit-taking suggest that the cryptocurrency could face short-term corrections. Investors should monitor key support levels as the market adjusts.
