Three indicators suggest that the Ethereum (ETH) price decline is not over yet.
Ethereum (ETH), which rebounded as high as $3,972 following the approval of the Ethereum Spot Exchange Traded Fund (ETF), underperformed Bitcoin and the broader cryptocurrency market last week, down 10%, and traders are betting on altcoins. The downward trend is questionable. It’s done.
Considering this, the price of Bitcoin (BTC) fell 6% during the same period, while the overall cryptocurrency market capitalization fell 5.3%.
A number of market and technical indicators show that ETH may witness a deeper correction before making another recovery attempt.
The ETH/BTC ratio has been trending downward over the past week.
Ethereum is down 10% over the past seven days, underperforming Bitcoin and other top layer 1 tokens. BTC price fell 5.5% over the past week, and the ETH/BTC ratio fell 5.21% from 0.055 on June 3 to 0.0513 on June 11, its lowest since May 20.
There are several reasons for ETH’s underperformance currently, including Bitcoin-related factors in 2024. U.S. spot Bitcoin ETFs were largely successful last week, recording nearly $2 billion in capital inflows. Additionally, the upcoming CPI reading and FOMC meeting decision on interest rate cuts have impacted the prices of all cryptocurrencies, including Ether, ahead of notable market corrections over the past few months.
Moreover, Ethereum’s network activity (in certain metrics) has decreased over the past 90 days. Daily active addresses on the Ethereum network Ethereum fell from 622,963 on March 20 to 458,400 on June 10, according to data from Glassnode. It’s down 1.2% in the last 48 hours alone.
While Ethereum still remains the leading network in the layer 1 segment, Solana has recently gained market share in this segment with regard to on-chain activity. According to data from DappRaddar, NFT trading volume on Ethereum has decreased 9% over the past seven days to 105 million.
The picture below shows the Ethereum network following Solana and the BNB chain across the entire UAW. More than 524 million UAWs interacted with the protocol, a decrease of 4.5% over the past seven days. This figure is significantly lower than Solana’s 2.7 million UAW, which increased 74% over the same period.
A decrease in on-chain activity means less demand for Ether within the ecosystem and lower prices.
Related: Munchables Hackers Return $62.8 Million Ether Without Ransom
Ether is facing strong resistance on the upswing.
Ether’s recent decline has resulted in the loss of a critical support level around the $3,500 demand zone, turning into resistance. Past price action shows that this region is showing stubborn resistance to the ETH uptrend. It most recently fell below this level on April 11, falling 25% to a low of $2,814 on May 2.
Data from IntoTheBlock reinforces the importance of this area of resistance. The In/Out of the Money Around Price (IOMAP) model shows that this area is within the $3,476 and $3,577 price range, where approximately 1.08 million ETH was previously purchased by approximately 2.6 million addresses.
The price of Ether is expected to decline deeper as seller activity increases in the near term at this resistance level.
Ether’s market setup points to a continued downward trend
After reaching a six-week high of $3,973 on May 27, ETH prices fell as bears recorded profits and the broader cryptocurrency market corrected. The price has since fallen 12% to the current price of $3,511.
Despite the recovery, a long bearish candle appears on the daily chart, suggesting the strength of the downtrend.
Ether bulls are hoping for immediate support at the psychological level of $3,400. A daily candlestick close below this level would be a sign that the bulls are unable to defend this level and a decline to $2,840 is expected. Such a move would represent an 18% decline from current prices.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.
