Ethereum (ETH) holders have shown a remarkable level of confidence in the cryptocurrency, refraining from selling despite a recent drawdown. There appears to be a prevailing belief that the recent rebound above $3,400 could signal a more significant upwards trend. This on-chain analysis delves into the likelihood of such a trend.
On December 30, Ethereum witnessed a slight slump, with its price dropping below the $3,400 mark. However, the cryptocurrency has since bounced back above this threshold. Analysis suggests that the actions of Ethereum investors have been crucial in achieving this quick recovery.
Data from IntoTheBlock reveals that the average holding time of the coin has risen by 40% in the past week. The coin holding time, which measures how long a cryptocurrency is held without being sold, is a reliable indicator of investor sentiment. A rise in holding time signals that holders are not selling, while a decrease suggests the opposite. The recent rise in Ethereum’s holding time indicates that investors are bullish about the cryptocurrency’s short-term price action. If this trend continues, it could result in Ethereum’s value climbing even higher.
However, despite the overall optimism and recent price surge, on-chain volume in profit has seen a decrease. On the last day of 2024, the transaction volume in profit stood at 995,000 ETH. As of today, it has decreased to 661 ETH. This reduction further solidifies the bullish sentiment among Ethereum investors. A continued decline in this figure would suggest that Ethereum’s price is less likely to come under selling pressure, potentially paving the way for a significant uptrend.
On the technical front, bulls have successfully defended the support at $3,328. Additionally, the Money Flow Index (MFI), a technical indicator that measures the level of buying and selling pressure around a cryptocurrency, has seen an increase. An increase in the MFI indicates buying pressure, suggesting that Ethereum could soon close above $4,111. If this prediction holds true, Ethereum’s price could soar towards the $4,500 mark.
However, if bears manage to pull Ethereum’s price below the support at $3,328, this optimistic prediction may not materialize. In such a scenario, Ethereum’s price could slide to $3,081 or, in a highly bearish situation, even to $2,878.
In conclusion, while the current on-chain indicators and technical analysis suggest bullish sentiment among Ethereum investors, the volatile nature of the cryptocurrency market necessitates cautious optimism. Future developments should be closely monitored to gauge the potential trajectory of Ethereum’s price.
