Ether (ETH) has fluctuated around $3,000 for the past three weeks, marking a consolidation phase after its sudden drop to $2,620 on Nov. 21. Ether traders are now questioning the chances of further corrections if support at $2,800 is breached.
Key insights:
Ether fell below $3,000 again due to a lack of futures demand and aggressive selling from long-term holders.
Decreasing Ethereum network fees and activity indicate a decline in on-chain demand.
Weak technical signals suggest a potential drop to $2,300 if the next support level is lost.
ETH price trapped between two trendlines
Ether’s recent rebound was halted by resistance at the 50-day exponential moving average (EMA), currently at $3,260, as depicted in the daily chart below.
Related: Predictions for Ether price movement indicate a potential rally as ETH ETF inflows resume
However, this move allowed ETH/USD to find support within the $2,800-$2,600 demand zone, where the 200-week EMA resides.
ETH needs to rise above the resistance at $3,000 and pass the 50-day EMA to emerge from consolidation for a sustained recovery towards $4,000.
The Glassnode cost basis distribution heatmap revealed resistance between $3,100 and $3,250, where approximately 5.9 million ETH were acquired.
On the downside, a crucial support area lies around $2,800, where 5.8 million ETH were purchased earlier.
Ether price shows lack of bullish momentum
Ether futures are currently priced at a 3% premium compared to bearish ETH spot markets, indicating decreasing demand from leveraged buyers.
In bearish market conditions, futures premiums usually remain below 5%, reflecting weak interest in leveraged long positions and diminished trader optimism.
Worryingly, even last week’s rebound to $3,750 did not revive sustained bullish sentiment among traders.
The bearish trend in Ether futures has coincided with a reduction in long-term holder supply, which has dropped by 847,222 coins in the last 30 days—the steepest decline since January 2021. This adds to the selling pressure preventing ETH from remaining above $3,000.
Ether’s struggle to stay above $3,000 can also be connected to the decreasing Ethereum network fees, although this trend has impacted the entire cryptocurrency market.
Ethereum chain fees summed up to $15.1 million over the past 30 days, a 45% decline from the previous month. In contrast, fees on BNB Chain decreased by 56%, while Tron saw a 15% reduction.
Although the number of active addresses on Ethereum’s base layer grew by 3.5% during the same timeframe, it dropped by 14% over the last week. Transaction numbers have also fallen by 11% over the past seven days.
Bears targeting $2,300 ETH price
The ETH/USD pair has confirmed a bear flag on the daily chart after falling below its lower boundary at $3,200, as illustrated below.
“Ethereum is consolidating following a sharp sell-off, forming a bear flag beneath previous support around the 3,173 to 3,250 range,” noted analyst Danny Naz in an X post on Sunday, adding:
“That area has turned into resistance.”
The projected target of the flag is $2,300, indicating a 22% downturn from the current price.
Examining the 12-hour timeframe, a breakthrough and close below the lower trendline of a megaphone pattern at $2,800 would pave the way for a more pronounced correction towards the pattern’s target of $2,376.
This move would signify an 18% drop from the current price.
If this support fails and bears succeed in driving the price below $2,800, the ETH price could fall to the subsequent support zone of $2,716 to $2,623.
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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. While we strive to provide accurate and timely information, Cointelegraph does not guarantee the accuracy, completeness, or reliability of any information in this article. This article may contain forward-looking statements that are subject to risks and uncertainties. Cointelegraph will not be liable for any loss or damage arising from your reliance on this information.
