Potential Reasons for a Decline in ETH Price
Ethereum’s (ETH) price appears poised for a potential decline as it nears a critical resistance level of approximately $2,843. Currently trading at $2,658, showing a slight decrease of 0.2% at the time of publication, Ethereum’s on-chain data reinforces a bearish sentiment, with a notable uptick in Ethereum’s Exchange Flow Balance and a decrease in development activity.
Furthermore, data from Lookonchain reveals that Vitalik Buterin, the founder of Ethereum, has transferred $534,000 worth of ETH to the Kraken exchange. This move could intensify selling pressure and contribute to a negative outlook for Ethereum in the near future.
Ethereum is retracing towards its 50% retracement level of $2,843, calculated from the high of $3,562 on July 22 to the low of $2,124 on August 5. This level aligns closely with the daily resistance at $2,927, marking it as a crucial barrier for Ethereum. With the current trading price at $2,658, a failure to surpass $2,843 could potentially lead to a 20% decline to the weekly support level of $2,118.
Analyzing the daily chart, indicators like the Relative Strength Index (RSI) and Awesome Oscillator (AO) are below their neutral levels, indicating a looming bearish trend. Santiment’s Exchange Flow balance for ETH, which tracks the net movement of tokens to and from exchange wallets, has shown a notable positive shift from -62,018 to 20,707, suggesting increased selling activity among investors.
Moreover, Ethereum’s Development Activity metric, reflecting project development events on the public GitHub repository, has seen a decline from 265 to 257, indicating a continuous drop since mid-July. This downward trend signifies reduced development activity for Ethereum, painting a bearish picture for its price trajectory.
Despite the prevailing bearish signals from technical analysis and on-chain data, a potential positive scenario could emerge if Ethereum’s price manages to close above the high of $3,396 on July 29. Such a move would create a higher high on the daily chart, potentially leading to a 5% increase to retest the high of $3,562 from July 22.
