Ethereum price has registered impressive gains over the past week. Now, this may sound promising at first glance. However, this approach couldn’t be further from the truth as on-chain metrics reveal the potential for stalled growth for the cryptocurrency market’s favorite altcoin – ETH.
Problems and obstacles facing ETH
Ethereum’s volume appears to be unseen, despite a nearly 21% increase over the past week. Price rise without follow-through from volume indicates a fake run-up waiting to be reversed.
On-chain volume for ETH is trading at 12.93 billion, which is well below the 200-day moving average (MA) of 14.2 billion. This drop in volume, which moved below the 200-day EMA, has been a consistent trend since March 4. This seemed to indicate low investor interest. Hence, the recent leg-up is likely to get its first chance.
The 365-day market price to real value (MVRV) model is used to calculate the average profit/loss of investors who have bought ETH tokens over the past year. A negative value below 10% indicates that short-term holders are selling at a loss and is usually where long-term holders accumulate, as the risk of a sell-off is relatively low. Therefore, values below -10% are often referred to as the “opportunity zone”.
At press time, the 365-day MVRV stood at -9.3%, indicating that long-term holders have been hoarding for some time. Though the index may go to zero, it is unlikely to move further considering the past figures.
Therefore, the growth in Ethereum price remains limited and lends credence to the technical outlook.
While these two metrics point to the possibility of a lack of momentum for the price of Ethereum, the Supply Distribution Index shows a clear indication why an uptrend is unlikely for ETH.
final factor
Over the past three months, the number of whales holding 100,000 to 1,000,000 ETH has dropped from 145 to 140. Simply put, five holders have offloaded their holdings and exited the Ethereum network.
Furthermore, whales holding the 1 million to 10 million ETH tokens in the category have fallen by two. This means that these long-term investors also get rid of their holdings or booked profits.
These movements by whales or institutional investors suggest that they are not optimistic about the performance of the Ethereum price in the near future. Ergo, this is a tailwind of a technical perspective for ETH.