Ethereum, the world’s largest altcoin, has suffered a massive setback in terms of price. In this bearish situation, the altcoin fell to extremely low levels. Nevertheless, as of press time, ETH has noticed some recovery as it crossed $2k on the charts. Ethereum recovered about 14% from its lowest level at $1,800.
What’s next?
On-chain analysis-based firm Sentiment shared some insight into what the next price action could be for Ethereum. The data provider noted this 8-hour chart, linked below, exhibited a heavy bearish ‘building up’ for Ethereum at $2,000.
“This is generally not good for late shorters and a squeeze is likely to push prices higher,” the blog said.
Ergo, Ethereum could see a potential increase in its price given this narrative. but it’s not like that. There was also a decline in the supply of Ethereum on exchanges at press time. This appears to support the above bullish picture.
But, one needs to consider what the May 1 episode did –
“While we saw a decent drop in supply on the exchanges for the past year or two, there was a huge increase in supply on the exchanges on 1 May 2022 as people rushed to exit their positions, which was clearly reflected in the price itself. It happens.”
Thereafter, a further increase in the exchange supply will lead to an additional drop. However, this movement could lead to a possible scenario where investors sold or abandoned their ETH holdings.
Consider this – according to the blog, ETH’s MVRV 90D (measures holders’ mid-term profit/loss) “shows we are almost in the opportunity zone, which has historically marked a local bottom with a decent R/R” have seen it develop.”
Even at press time, the said metric stood around the (-)20 zone—still indicating an “opportunity zone.”
Normally, a negative value indicates that these holders are underwater. Hence, the chances of a sell-off are slim. This may indicate that short-term holders are at a loss and long-term holders accumulate under these circumstances. Therefore, the above range is called the “opportunity zone”, as the risk of selloff is low.
other factors?
In addition to on-chain analysis, developments within the ecosystem and global macros will play a big role.
For example, Cloudflare delved deeper into Web3 and Ethereum staking with the launch of validator nodes.
Such support could help ETH in the coming days.