Ether (ETH) has fluctuated around $3,000 for the past three weeks, entering a consolidation phase after its flash crash to $2,620 on Nov. 21. Ether traders are now pondering the possibility of a further correction if support at $2,800 fails.
Key takeaways:
Ether dipped below $3,000 again due to dwindling futures demand and significant selling by long-term holders.
Falling Ethereum network fees and activity indicate a decrease in on-chain demand.
Weak technical indicators suggest a potential drop to $2,300 if the next support level is breached.
ETH price caught between two trendlines
Ether’s recent upturn faced resistance from the 50-day exponential moving average (EMA), currently positioned at $3,260, as depicted in the daily chart below.
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This movement allowed ETH/USD to find support within the $2,800-$2,600 demand zone, where the 200-week EMA is located.
ETH must surpass the resistance at $3,000 and the 50-day EMA to break free from consolidation and make a sustained recovery towards $4,000.
The Glassnode cost basis distribution heatmap indicated resistance between $3,100 and $3,250, where investors acquired approximately 5.9 million ETH.
On the downside, the critical support area is near $2,800, where 5.8 million ETH were previously purchased.
Ether price lacks bullish momentum
Ether futures are presently trading at a 3% premium relative to bearish ETH spot markets, reflecting a decline in demand from leveraged buyers.
In bearish market conditions, futures premiums generally remain below 5%, indicating weak demand for leveraged long positions and diminished optimism among traders.
More worrisomely, even last week’s recovery to $3,750 did not reinstate sustained bullish sentiment among traders.
The bearish trend in Ether futures has coincided with a drop in long-term holder supply, which has decreased by 847,222 coins over the past 30 days, marking the largest decline since January 2021. This adds to the selling pressure that prevents ETH from maintaining its position above $3,000.
Ether’s inability to remain above $3,000 can also be attributed to the decline in Ethereum network fees, an issue affecting the entire cryptocurrency market.
Ethereum chain fees amounted to $15.1 million over the last 30 days, reflecting a 45% drop from the previous month. In contrast, fees on BNB Chain declined by 56%, while Tron saw a 15% reduction.
Despite a 3.5% increase in active addresses on Ethereum’s base layer during the same period, there has been a 14% decrease over the past week. The number of transactions has also dropped by 11% over the last seven days.
Ethereum bears target $2,300 ETH price
The ETH/USD pair has validated a bear flag on the daily chart after dropping below its lower boundary at $3,200, as shown below.
“Ethereum is consolidating after a sharp sell-off, forming a bear flag beneath prior support near the 3,173 to 3,250 zone,” said analyst Danny Naz in an X post on Sunday, adding:
“That area has flipped to resistance.”
The measured target of this flag is $2,300, indicating a 22% decrease from the current price.
Focusing on the 12-hour timeframe, a break and close below the lower trendline of a megaphone pattern at $2,800 would pave the way for a deeper correction toward the target of $2,376.
Such a shift would signify an 18% drop from the current price.
If this support point collapses and the bears succeed in pushing the price under $2,800, ETH might fall to the next support zone between $2,716 and $2,623.
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.
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.
