Ethereum price hits $3.7K, but there’s a problem
Ethereum [ETH] experienced a significant surge in value throughout the previous week, with its valuation surpassing the $3.7k threshold comfortably.
Amidst this upbeat price momentum, the activities of large-scale investors, or "whales," were particularly noteworthy, showing patterns of considerable accumulation.
Massive Accumulation by Ethereum Whales
According to CoinMarketCap, ETH witnessed a period of relative stability before momentum shifted around May 21st, propelling the cryptocurrency into a bullish state. The value of the token soared by over 25% within a seven-day span.
As of this writing, ETH's trading price has reached $3,789.10, pushing its market capitalization to beyond $455 billion.
Additionally, there was a notable uptick in Ethereum transaction volumes.
A recent analysis by IntoTheBlock highlighted a significant increase in ETH transactions exceeding $100k, achieving a peak not seen since late March. A substantial portion of this activity was attributed to whale transactions.
The analysis further pointed out that addresses holding at least 0.1% of the total ETH supply demonstrated the most considerable daily increase in accumulation in over a month, indicating whales were actively purchasing ETH.
AMBCrypto proceeded to investigate Ethereum’s on-chain data to determine if the market sentiment predominantly leaned towards buying.
Following a notable surge on May 22nd, the reserve of ETH on exchanges began to decline.
Data from CryptoQuant illustrated that the net deposit of ETH on exchange platforms was relatively low compared to the seven-day average, confirming strong buying pressure in the marketplace.
However, this phase of accumulation may draw to a close as the Relative Strength Index (RSI) for ETH has ventured into the overbought territory.
This development could potentially encourage investors to offload their holdings, potentially leading to a reduction in the token's price in the foreseeable future.
Could a Price Correction be on the Horizon?
Delving into Santiment’s data, AMBCrypto sought insights into the potential for a forthcoming dip in the token’s price.
Analysis revealed a recent decrease in ETH's Weighted Sentiment, alongside a significant increase in its NVT ratio, an indicator that could suggest the asset is currently overvalued - raising the likelihood of a price correction.
Despite this, the MVRV ratio maintained a bullish outlook, standing at over 15% at the time of analysis.
While some indicators showed bullish trends, several market indicators pointed towards a bearish outlook. For instance, the Money Flow Index (MFI) and the Chaikin Money Flow (CMF) both experienced declines, suggesting the possibility of a forthcoming price adjustment.
Should ETH adopt a bearish trend, investors might see its value retract to the $3.4k level. Conversely, to sustain the ongoing rally, ETH needs to convert its $3.79k resistance level into a support base.
