Ethereum has recently seen a struggle in its price recovery, primarily due to growing uncertainty in the market. After multiple failed attempts to rally, Ethereum’s price is currently facing pressure from both selling activity and a crucial demand zone.
While the demand zone, hovering around $1,880, has provided support, it is also preventing any immediate price reversal.
Ethereum Selling Is Necessary
For the first time in over two months, Ethereum is flashing a key sell signal as its Price DAA Divergence metric shows a concerning trend. The metric compares daily active addresses (DAA) against Ethereum’s price, providing insights into investor sentiment.
As DAA begins to fall alongside Ethereum’s price, it signals that the network is experiencing a decrease in activity, suggesting rising selling pressure. This trend is reflected in the appearance of a red bar, which indicates mounting bearish sentiment.
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Ethereum Price DAA Divergence. Source: Santiment
The drop in DAA suggests that fewer users are engaging with the network, which typically leads to a weakening market structure. When both DAA and price decline together, it’s often a sign that Ethereum’s bullish momentum has stalled, and a price dip could be imminent.
Interestingly, while the rising selling pressure around Ethereum might appear negative at first glance, it could be the catalyst for a much-needed price reversal. Ethereum’s MVRV (Market Value to Realized Value) pricing bands are signaling that $ETH is nearing a pivotal moment. MVRV below 0.8 has historically indicated that the altcoin is undervalued, suggesting that $ETH is due for a rebound.
With Ethereum trading below the Extreme Lows for approximately 5% of trading days, the MVRV signal is often a precursor to a price reversal. However, Ethereum needs more than just market signals—it requires investor confidence to push through. The current selling pressure may be limiting this momentum, but the situation remains fluid. If investors hold onto their positions rather than sell, $ETH could soon see a price rebound.
Ethereum MVRV Pricing Bands. Source: Glassnode
Investors Are Blocking $ETH Recovery
The most significant support level Ethereum currently faces is the $1,880 demand zone, formed by $ETH holders who have accumulated 1.406 million $ETH worth over $2.81 billion. This price range has been a critical level, with price dips to this area being met with a strong bounce back. Ethereum’s price has consistently been supported at this level, demonstrating that investors are reluctant to sell below it.
If Ethereum’s price does fall to this demand zone again, it is likely to be met with buying pressure. This would prevent further downside movement. However, should selling activity intensify and Ethereum slip below $1,880, this would trigger a sharper decline.
Ethereum CBD Heatmap. Source: Glassnode
Such a drop would likely trigger the reversal Ethereum needs, but it would also leave the cryptocurrency vulnerable to even lower levels. The balance at this demand zone is crucial in determining Ethereum’s immediate future.
$ETH Price Has Some Resistance Ahead
Ethereum is currently trading at $1,998, facing resistance along a downtrend line. This bearish momentum could suppress Ethereum’s price in the short term, making it difficult to initiate a rally. As a result, the price is likely to remain subdued, limiting the possibility of an immediate recovery.
With the ongoing bearish factors, there is a chance that Ethereum could drop toward the $1,902 support. A break below this level could see the price falling further, potentially reaching the $1,816 mark or lower. Such a move would be necessary to trigger the reversal that Ethereum needs to regain its upward momentum.
$ETH Price Analysis. “>
$ETH Price Analysis. Source: TradingView
Alternatively, if investor sentiment improves and macroeconomic conditions turn favorable, Ethereum could push past the current downtrend line. A move above this resistance would bring Ethereum closer to the $2,165 mark. This would invalidate the current bearish outlook and open the door for potential price rallies.
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