3 indicators show that Ethereum (ETH) price decline is not over.
After rallying to $3,972 after the acceptance of spot Ethereum exchange-traded funds (ETFs), Ether (ETH) has underperformed over the past week, compared to Bitcoin and the broader crypto market, down 10%, leading traders to suspect that the altcoin has a downward trend. It is completed.
To put this into context, the price of Bitcoin (BTC) fell by 6% over the same period, while the overall cryptocurrency market capitalization fell by 5.3%.
Several market and technical indicators show that ETH may witness a deep correction before making another recovery attempt.
The ETH/BTC ratio has seen a low over the past week.
Ether is down 10% over the past seven days, while Bitcoin and other top tier 1 tokens underperformed. The price of BTC decreased by 5.5% last week, the ratio of ETH / BTC decreased by 5.21% from 0.055 on June 3 to 0.0513 on June 11, the lowest since May 20.
Currently, there are a few reasons for ETH's underperformance in 2024, including Bitcoin-specific factors. US spot Bitcoin ETFs were successful last week, seeing nearly $2 billion in capital inflows. Additionally, the upcoming CPI reading and the rate cut decision of the FOMC meeting have affected all crypto prices, including Ether, in the last few months ahead of a notable market correction.
Moreover, there has been a decline in Ethereum network activity (by certain metrics) over the past 90 days. According to Glassnode data, daily active addresses on the Ethereum network decreased by 622,963 addresses from March 20 to 458,400 on June 10. It has seen a 1.2% decline in the last 48 hours alone.
Although Ethereum remains the network to beat in the Layer 1 sector, Solana has recently taken market share in chain activity in this segment. According to data from Dapradar, Ethereum NFT volume has decreased by 9% over the past seven days to 105 million.
As the image below shows, the Ethereum network tracks Solana and the BNB Chain in total UAWs. More than 524,000 million UAWs interacted with the protocol, a 4.5% decrease over the past seven days. That's far less than the 2.7 million UAWs at Solana, which increased 74% over the same time frame.
A decrease in activity on the chain suggests that the demand for Ether in the ecosystem is decreasing, which weighs on its price.
Related: Munnchables Hacker Returns 62.8M Ether Without Ransom
Ether faces strong resistance from above
Ether's recent decline saw it lose critical support levels around the $3,500 interest zone, turning it into resistance. Past price action has indicated that this area will provide stiff resistance for ETH bulls. The most recent drop below this level on April 11 was a 25% decline to $2,814, reached on May 2.
Data from IntoTheBlock reinforces the importance of this resistance zone. The Out of Money Area Price (IOMAP) model shows that this area is in the $3,476 and $3,577 price range, with 2.6 million addresses having previously bought approximately 1.08 million ETH.
If this defensive level sees a lot of activity from the sellers in the short term, the price of Ether is expected to go down.
The structure of the Ether market indicates a further downward trend
After hitting a six-week high of $3,973 on May 27, ETH prices have pulled back as bears took profits and the broader crypto market corrected. The price has since dropped 12 percent to a current price of $3,511
Despite the recovery, a long bearish candle can be seen on the daily chart, which indicates the strength of the decline.
Ether bulls are counting on immediate support from the $3,400 psychological level. A daily candle closing below this level would indicate that the bulls have failed to defend this, leading to a decline to $2,840. Such a move represents a drop of 18% from the current price.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
