The price of Ethereum (ETH) has surpassed $2,500 for the first time since October 1. However, despite the growing market optimism, this upward movement may not be as smooth as it seems.
In this analysis, BeInCrypto highlights several on-chain metrics that suggest a significant portion of ETH's gains may be suppressed.
Ethereum still faces problems
Ethereum’s price surge represents a 6% increase in the past 30 days. In the past 24 hours, the cryptocurrency’s volume has increased by 90%, indicating growing investor interest in Ethereum.
Despite this, data from IntoTheBlock shows that Ethereum’s Coin Holding Time has decreased by 56% in the last seven days. Coin Holding Time indicates the amount of time investors hold a cryptocurrency without selling it.
Typically, longer holding times correlate with higher chances of price increases, while shorter holding times often signal potential price declines. In the case of Ethereum, the recent drop in holding times suggests that despite the recent price rally, ETH holders are still selling.
Read more: Best Ethereum Wallets in October 2024
Ethereum Coin Holding Time. Source: IntoTheBlock
If sustained, the cryptocurrency’s value could fall in the short term. The Network Value to Transaction (NVT) ratio is another metric that supports a decline. A high NVT ratio suggests that the market cap is greater than the value transacted on the network.
On the other hand, a low NVT ratio indicates that transaction volume is outpacing market capitalization growth. While the former is a bearish signal, the latter is a bullish signal.
According to Glassnode, Ethereum's NVT ratio has increased in recent days, suggesting that the price of ETH may be overvalued relative to the current market condition.
Ethereum NVT ratio. Source: Glassnode
ETH Price Prediction: Drop Below $2,400?
An analysis of the ETH/USD daily chart shows that the Average True Range (ATR) has remained stable. Low ATR readings suggest low volatility and the possibility of a reversal or continuation of consolidation.
A high ATR, on the other hand, suggests increased volatility and the potential for prices to continue rising. Since the indicator is stable, it seems that ETH’s price could drop to $2,345. But this would only happen if buying pressure eases and bears take control of the altcoin’s direction.
Read more: Ethereum (ETH) Price Prediction 2024/2025/2030
Ethereum daily price analysis. Source: TradingView
However, Ethereum’s price could surge if the bulls ensure that the bears don’t gain the upper hand. In that case, the cryptocurrency’s value could surge well beyond $2,600, possibly reaching $2,983.
The article Ethereum (ETH) Price Rally Brings Worrying Risks appeared first on BeInCrypto.
