Ether (ETH) dropped to $2,800 on Monday, unable to sustain the $3,000 mark as rising expectations of a Bank of Japan interest rate hike unsettled the market. At the same time, mixed signals from technical analysis and on-chain data reflected uncertainty about Ether’s capacity to resist the downtrend.
Key points:
Ethereum’s price fell 5.5% on Monday, slipping below $3,000 again amid concerns over a Bank of Japan rate hike.
For a robust recovery, bulls need to break above $3,200 persistently, while dropping below $2,800 would negate the macro bullish trend.
Ether’s MVRV Z-Score is nearing the accumulation zone, indicating a potential local bottom.
Ether’s price is trapped between two significant levels
Ether’s 18% recovery from a low of $2,620 on November 21 was hindered by selling pressure at the $3,000 psychological barrier.
“This was a major support that has now turned into resistance,” noted pseudonymous analyst That Martini Guy ₿ in an X post on Friday.
Related: ETH might soon reclaim $3.2K, according to low stablecoin yields: Santiment
The convergence of the 50-week (yellow wave) and the 100-week (blue wave) moving averages at this level adds to its significance (see chart below).
“If $ETH decisively breaks above this level, expect a rally back into the mid $3,000s throughout December!” That Martini Guy ₿ added.
The Glassnode cost basis distribution heatmap identified another resistance area higher up, between $3,150 and $3,230, where approximately 5.1 million ETH was acquired.
On the downside, the ETH/USD pair has traded above a crucial support zone near $2,800, where 3.6 million ETH were previously bought.
“ETH currently maintains a good hold on the key support area,” stated analyst Daan Crypto Trades in a recent X post, referring to the $2,800-$2,850 support zone.
The altcoin could see a “clear invalidation if it falls below these local lows,” the analyst added:
“That is a crucial area for the bulls to defend.”
On the upside, according to Daan Crypto Trades, surpassing $3,350 could bring the ETH price nearer to the range high at $4,000.
“$2,850 and $3,350 are the critical levels to watch in this region.”
As Cointelegraph mentioned, buyers are anticipated to vigorously defend the $2,800-$2,600 support level, while bears are expected to push back at the 20-day EMA around $3,100.
Ethereum ETF inflows indicate positive sentiment
Ether’s ability to avoid a deeper correction was supported by inflows into US-based Ethereum spot exchange-traded funds (ETFs).
Ether ETFs concluded Thanksgiving week with $312 million in inflows, suggesting that the worst of the institutional crypto sell-off might be behind us.
Meanwhile, global Ethereum exchange-traded products (ETPs) saw inflows of $309.1 million last week, underscoring ongoing demand from institutional investors.
However, Ether’s ability to maintain levels above $2,800 and regain $3,000 may be hindered by insufficient network demand, as indicated by the drop in Ethereum network fees, according to data from Nansen.
Ethereum chain fees amounted to $2.68 million over the past week, reflecting a 54% decline from the previous week. In contrast, fees on Solana increased by 2%, while those on Tron remained stable, with a 0.4% rise.
The number of active addresses on Ethereum’s base layer rose by 20% during the same timeframe, while transaction counts grew by 4%. This indicates that increased user engagement could lead to elevated on-chain demand for ETH, potentially driving its price upward.
Ether’s MVRV Z-Score suggests a local bottom
Ether’s MVRV Z-Score, an important on-chain metric for identifying market tops and bottoms, is approaching the historical accumulation zone (indicated by the green line in the chart below), reinforcing the idea that ETH could be forming a local bottom.
The last instance when Ether’s MVRV Z-Score dropped to a similar level around 0.30 was in June, after a 25% price decline, coinciding with a local market bottom at $2,100. This led to a multimonth rally, with the ETH/USD climbing 134% to its then all-time high of $4,950.
As Cointelegraph reported, most Ethereum valuation models suggest that the top altcoin is undervalued, projecting ETH prices above $4,000.
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.
