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- It has soared to $2,684 but is now facing potential selling pressure.
- An increase in foreign exchange deposits suggests profit taking and possible price correction.
Buoyed by a bullish wave over the past week, Ethereum soared to a 16-day high of $2,684, up 8%. This rally mirrors Bitcoin's recent rally above $68,000, pushing Ethereum to all-time highs. However, as of today, Ethereum has pulled back slightly and is trading at $2,623, showing new signs of possible downside risk.
On Monday, Ethereum broke through the major resistance level at $2,579, causing older and long-dormant coins to re-enter the market. The data shows a surge in activity among long-term holders who have begun moving their holdings, with consumption age indicators surging by more than 400%. This new activity suggests that many investors are looking for profit-taking opportunities.
However, the notable increase in net flows of Ethereum to exchanges suggests that a significant portion of these transferred coins are being sent to trading platforms. These changes in activity often occur before selling pressure builds. This is because investors typically transfer assets to an exchange when preparing to sell. On Monday, more than 51,000 ETH, worth more than $135 million, was transferred to exchanges, highlighting this trend.
If this selling pressure continues to build, Ethereum price could face a correction and fall towards the $2,579 support level. If this level is not sustained, Ethereum could fall further to around $2,320, which would represent a 10% drop from the current price.
Should investors remain cautious?
Additionally, rising supply and reserve levels on Ethereum exchanges indicate increased investor vigilance, as more ETH is being deposited onto exchanges, presumably in preparation for a sale. If this trend strengthens, prices may fall further. Long-term holders currently facing losses may contribute to the pressure as they seek to minimize risk.
In conclusion, while Ethereum's recent rally has been strong, increased currency trading and profit-taking suggest the cryptocurrency may face a short-term correction. Investors should monitor key support levels as the market corrects.
This content originally appeared on The News Crypto
