Ether (ETH) has been consolidating around the $3,000 mark for the past three weeks, following a sharp decline to $2,620 on November 21st. This sideways movement has raised concerns among traders about a potential deeper correction if the $2,800 support level is breached. The price action suggests a tug-of-war between buyers and sellers as Ether attempts to establish a clear direction.
Key Price Levels and Technical Indicators
Ether's recent recovery has faced strong resistance at the 50-day exponential moving average (EMA), currently around $3,260. Conversely, the $2,800–$2,600 zone continues to act as a support area, reinforced by the 200-week EMA.
To break out of the current consolidation phase and initiate a sustained upward trend towards $4,000, ETH needs to overcome the $3,000 resistance and convincingly surpass the 50-day EMA.
According to price distribution data, a significant resistance zone lies between $3,100 and $3,250, where investors have accumulated approximately 5.9 million ETH. On the downside, the $2,800 area also represents a notable support level, with 5.8 million ETH previously purchased there.
Weakening Bullish Momentum
Currently, Ether futures are trading at a 3% discount compared to the spot market, indicating weakening demand for leverage among buyers. In a bearish market environment, this spread typically remains below 5%, reflecting a lack of strong bullish sentiment.
Notably, even during Ether's brief rally to $3,750 last week, bullish sentiment failed to fully recover. The downward trend in the futures market coincides with a significant decrease in supply held by long-term holders. Specifically, 847,222 ETH have left the wallets of long-term holders in the past 30 days, marking the largest decrease since January 2021. This exodus is adding selling pressure, hindering the ability to sustain prices above $3,000.
- Key Observation: Long-term holders are reducing their ETH holdings.
- Impact: Increased selling pressure on Ether.
Declining Transaction Fees and Network Activity
The decline in transaction fees on the Ethereum network is also contributing to the corrective trend, although this is a broader issue affecting the entire cryptocurrency market.
Total transaction fees on Ethereum in the past 30 days amounted to $15.1 million, a 45% decrease compared to the previous month. Fees on BNB Chain and Tron have also decreased by 56% and 15%, respectively.
| Blockchain | 30-Day Transaction Fees (USD) |
|---|---|
| Ethereum | $15.1 million |
| BNB Chain | Significant Decrease |
| Tron | Moderate Decrease |
While the number of active addresses on Ethereum has increased slightly by 3.5% in the past month, it has decreased by 14% in the last 7 days. The number of transactions has also decreased by 11% during the same period.
Bearish Targets and Potential Downside Risks
The daily chart for the ETH/USD pair has confirmed a bear flag pattern after the price broke below $3,200. According to analyst Danny Naz, Ethereum is consolidating after a strong sell-off, forming a bear flag pattern below the previous support zone of $3,173 to $3,250, which has now become resistance.
Technical analysis suggests that the target for the bear flag pattern is $2,300, representing a 22% decrease from the current price.
On the 12-hour timeframe, if the price breaks and closes below the lower trendline of the megaphone pattern at $2,800, the market could witness a deeper correction towards the target area of $2,376, an 18% decrease from current levels. If the $2,800 support area fails to hold, bears may continue to push the price down to the next support area of $2,716 to $2,623.
FAQs
Why is Ether struggling to stay above $3,000?
Ether is facing resistance around $3,000 due to weakening bullish momentum, long-term holders selling off their ETH, and declining transaction fees on the Ethereum network. The futures market also indicates a lack of strong buying pressure.
What are the key support and resistance levels to watch for Ether?
Key support lies in the $2,800-$2,600 range, while significant resistance is between $3,100 and $3,250. Overcoming the $3,000 resistance and the 50-day EMA around $3,260 is crucial for a sustained upward trend.
Why are long-term Ether holders selling their ETH?
The article does not explicitly state why long-term holders are selling, but it notes that 847,222 ETH have left their wallets in the past 30 days. This exodus is adding selling pressure and hindering Ether's ability to maintain prices above $3,000.
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