Amid the broader volatility, the Ethereum price suffers a surge in supply pressure as the Bitcoin price hangs near $55K. With the crypto market witnessing the third recovery day, Ethereum prepares for a bullish recovery.
However, the fundamentals and on-chain movement are signaling crucial crossroads. Will Ethereum survive the increasing supply to avoid a drop to $2100? Let’s find out.
Top Reasons Why Ethereum Can Fall
In support of the ongoing correction phase, the Ethereum spot ETFs maintained a net outflow last week, accounting for $91.04 million. Topping the charts of most outflows, the Grayscale ETF, ETHE, had a net outflow of $111 million.
A multiple-signature wallet linked to Vitalik Buterin has recently sold a massive amount of ETH tokens. The wallet received 3,800 Ethereum tokens worth almost $10 million from Vitalik on August 9th, 1938.
Following the handout, the wallet recently cashed out 760 Ethereum tokens in exchange for 1.835 million USDC tokens. The trade occurred at an average price of $2,414 per Ethereum token.
In another recent sell-out news, the Foundation just sold 450 ETH tokens in exchange for 1.029 million DAI tokens. In total, the Foundation has sold 550 ETH tokens worth 1.28 million at an average price of $2,324.
ETH Price Performance
With a market cap of $278 billion, the ETH Price is trading at $2,312. With an intraday jump of 0.71%, the ETH price action teases a triple White Soldiers pattern following the weekend recovery.
In the past three trading days, the altcoin price has surged by 4.07% and reclaimed the $2,300 mark. However, the higher price action in the intraday candle from the 24-hour high of $2,338 reveals a long-awaited formation.
Tradingview
Currently, in a falling-wedge pattern, the bull cycle in the altcoin price is expected to face a bearish reversal. Further, the ETH price retests the broken $2,350 support and teases another reversal to the $2,100 support.
The dynamic supports maintain a bearish alignment with a death cross in the 50 and 200-day EMA.
Recovery Signals To Watch Out
Despite the broader market sentiments turning bearish, Ethereum just hit a four-month high in network growth. The event occurred on a Sunday, traditionally considered the least active day of the week in the crypto market. Ethereum network registered a growth of 126,210 new wallets.
With the massive surge in its network utility, the Ethereum token price is expected to bounce back. Furthermore, despite the massive sell-off with the co-founder of Ethereum and the Ethereum Foundation, a smart whale is buying ETH at the bottom.
The whale caught the bottom with a recent purchase of 5,000 ETH worth 11.46 million. Before this, the whale had a history of capturing bottoms when he bought 5,200 ETH at an average of $1,322 in November 2022.
Following this purchase, the whale made a profit of more than $4 million by selling it off for an average of $2,093. The sell-off occurred in January, December 2023, and January 2024.
Crucial Supports For Ethereum
Despite the recovery rally in motion, the ETH price could take a bearish exit and test the bottom support levels. Based on the daily chart, the crucial support levels for Ethereum are present at $2250 and $2100.
Want to find out if Ethereum will bounce back to $4,000 this year? Check out our ETH Price Prediction now for a detailed analysis of the upside potential in the biggest altcoin.
Source: https://coinpedia.org/price-analysis/top-reasons-why-ethereum-could-drop-to-2100-this-week/