Ethereum (ETH), the world’s second-largest cryptocurrency by market capitalization, is experiencing downward pressure as its supply on exchanges reaches a one-year high. This increase in supply is a crucial indicator of potential selling pressure and suggests that a short-term correction may be imminent. Despite the recent stabilization in its price range, Ethereum remains nearly 16% below its March 12 peak of $4,093.92 (approximately R77,723.11 at the current exchange rate of R18.99 to $1).
The accumulation of Ethereum in exchange wallets has surged, marking the highest point seen in the last year as of Monday. This significant uptick in exchange supply often precedes a mass sell-off event, hinting at heightened selling pressure on Ether. The correlation between the rising exchange supply and Ethereum’s decline from its year-to-date high further supports this notion.
Interestingly, transactions from large-wallet investors, or “whales,” involving amounts over $100,000, have decreased following Ethereum’s peak. This trend typically indicates profit-taking activities, which, in the context of Ethereum’s price drop, suggests that whales are likely capitalizing on their investments. A recent analysis showed a correlation between these whale transactions and profit-taking, particularly noticeable in mid to late March.
Ethereum’s current price trajectory is on a downtrend, with the cryptocurrency forming lower highs and lows since its March peak. Presently, Ethereum’s price is battling resistance at the $3,575.24 mark (approximately R67,895.43), a critical 50% Fibonacci retracement level. The Moving Average Convergence/Divergence (MACD) indicator’s negative momentum underscores the bearish outlook, with a potential dip to the $3,000 (approximately R56,970) psychological support level in sight.
Should Ethereum’s price manage to collect liquidity below this threshold, a rebound to its year-to-date peak is possible. However, this bearish scenario could be overturned if Ethereum closes above the resistance level of $3,575.24, facing subsequent resistance at $3,500 and $4,000 before possibly retesting its peak.
This development is particularly relevant for South African investors monitoring the international crypto market’s impact on local investment strategies. As Ethereum navigates through these technical levels, its performance could offer significant insights into the broader cryptocurrency market’s direction.
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