In recent times, Ethereum has faced a lot of selling pressure, with the last three months marking its most significant selling volume, according to Ki Young Ju, who runs CryptoQuant.
The entire cryptocurrency market and Ethereum—by extension—have seen downturns recently, along with some persistently bearish outflows from Ethereum spot ETFs. Nevertheless, it looks like Ethereum is on the cusp of getting itself back on track. The $800 price level, in particular, is one big barrier that a lot of investors will be watching closely as we close in on the end of 2023.
Support Levels and Key Market Developments for Ethereum
In recent months, the selling pressure largely dominated Ethereum’s price. Institutions and investors reassessed their positions in the cryptocurrencies amid the volatile conditions of the market. This was the most severe selling pressure the cryptocurrency faced in the last three months, according to Ki Young Ju. These were tough conditions for Ethereum, but now there’s a sense that things are beginning to stabilize in the market. There’s a growing optimism that Ethereum’s price action could be on the verge of breaking out. The potential breakout is in the works amid some recovery in its technical indicators.
Currently, Ethereum has a critical support level near $1,887, where a large chunk of ETH was bought up by investors. In fact, about 1.63 million Ethereum were accumulated at this price point, signaling that this area is incredibly important if the crypto is to stay above key price thresholds. If it can hold that level and reverse trend, it’s entirely possible that we could see Ether targeting the $2,800 price level.
The $1,887 support level is a major point of defense for Ethereum holders and is a reminder of the coin’s underlying, enduring strength. Accumulating so much ETH at precisely this price point only underscores the long-held belief among long-term investors that ETH around $1,887 represents a tremendous buying opportunity. But with so many ETH holders now facing the uncertain prospect of short-term price fluctuations, the very stability of this level may be crucial to determining whether the coin can maintain its current upward trajectory—or is more likely to encounter further challenges in the days and weeks ahead.
ETF Outflows and Market Sentiment
Even though Ethereum holds a technical appearance that could be quite bullish, the sentiment surrounding it seems to be not so euphoric as a result of—believe it or not—somewhat of a lack of favorable market conditions. Some conditions seem less than optimal. For six consecutive days prior to March 12, Ethereum had been seeing some notable profit-taking (or perhaps just reduced interest) that totaled about $10.4 million flowing out of Ethereum ETFs. To be precise: in between March 6 and March 12, this was the situation. Thus, part of the atmosphere surrounding this is that even some large institutional players seem to be becoming a bit more careful with their Ethereum investments.
The trend of outflows has endured for a few days now, and it could be a sign of caution among investors. That’s even more true given the volatility and uncertainty surrounding the cryptocurrency markets.
A spot ETF gives institutional investors a way to gain exposure to Ethereum without directly holding the asset, so a decrease in inflows can mean anything from reduced confidence in ETH to a simple desire to take profits.
Even though funds are leaving, the price of Ethereum has been stable. That could mean that the market has already factored in these not-so-great developments, or concerns with them, into the price and that, otherwise, the price of Ethereum is doing fine and doesn’t have much in the way of support level that might be falling out to the distance (what’s called a “cascade support level”) to drop to the price of, say, a dish that’s 38% below its value on January 1st.
Picture it: Ethereum is doing OK; not-so-happy-go-lucky developments aren’t having an adverse effect on its price, which speaks to the base strength that the coin has and the long-term upside that a lot of its investors are still seeing.
The Road Ahead for Ethereum
The price action of Ethereum over the next few weeks is likely to depend on two factors: whether the key support levels can hold and how the market as a whole feels about things. There’s a bit of an exodus happening with Ethereum ETFs, and that’s cause for concern, but if things can stabilize with Ethereum over the next few weeks, we may see a bit more of a recovery with it as we head into the close of 2023.
An opportunity might be developing to either enter or re-enter the Ethereum market, and that potential could come from a breakout toward the $800 level. If the price were to exceed that level, it could represent a significant moment. That’s because Ethereum’s fundamentals remain sound, especially with several imminent upgrades to the network that ought to improve things like scalability. If the price clears that barrier, it could be the next big moment for Ethereum.
Ethereum’s recent sell-off and trying to recover from it has occurred in a very decisive, pivotal last few weeks. On one hand, net outflows from spot ETFs suggest that institutional investors are not piling into Ethereum just yet and are exercising some caution. On the other hand, there is a very strong accumulation at key support levels that is suggestive of something quite the opposite—strong, almost unswerving faith in Ethereum’s future among a significant number of market participants. If the momentum from either of these events holds, we might soon be looking at upward price adjustments for Ethereum.
To conclude, even though Ethereum has been selling off recently, I see it as being at a price with some solid support. Its long-term bullish momentum accumulation pattern, not just on a price chart but also in terms of users and usage, gives me the confidence to at least hold the position of this crypto coin. The real test for Ethereum’s price will be to see if it can break through and hold above $2,100 over the next few weeks.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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