Ethereum bearishness continues due to a confluence of factors including the sale of ETH by Ethereum Foundation. The ETH price started falling on 25 August after reaching a high of $2,788.90. At the time of writing ETH price has declined by 3.9% within the last 24 hours. Now,it is trading at $2,521.33 ETH/USDT at Gate.io . This pullback is occurring at a time that whales are accumulating the altcoin. Despite the recent acquisition of 200,000 ETH its price has fallen. Alichart gave an update on the whale activity through an X post.
Considering the large amount of ETH that has been acquired we would expect its price to rise. However, it is in a downtrend.
Possible Reasons for ETH Price Fall
The crypto market was expecting the recent bullish trend to continue but that has not been the case. There are a number of explanations about that.
Whale Sale Activity: First, there are strong indications that many whales have been selling their ETH. The reason could be that they were in profit zones depending on the days they acquired their ETH holdings. As a fact, many whales have been shifting their ETH to exchanges, probably for the purpose of selling it. LookonChain has been given the following updates about whale ETH selling activity.
As the image shows, there has been a high whale sale activity over the past few days. Maybe as the price falls further that may stop.
Spot ETH ETF Outflow: The other factor that has been contributing to the ETH slide down should be net ETH ETF outflow. According to Farside, the nine ETH ETFs had a net outflow of $500 million within a short period. Such a large net outflow shows lack of investor interest in the asset. As a result, that trend might have created a negative crypto market sentiment that could have contributed to the ongoing ETH price drop.
Ethereum Foundation Dumping of 35K ETH: Probably, the greatest trigger to the current Ethereum downward trend was the Ethereum Foundation’s sale of 35,000 ETH. The Foundation sold that amount on 23 August at a time the ETH price was fairly high. Some analysts believe that when the Ethereum Foundation transferred the ETH to Kraken exchange it acted as a trend top signal.
On 23 August the Ethereum Foundation’s balance decreased from 309,000 ETH to 274,000 ETH. Based on the past trend, every time the Ethereum Foundation sells a large sum of the asset its price falls. In this case, the ETH price dropped by almost 15% within the following five days. The next graph shows what occurred after the ETH sale.
As noted on the graph, the ETH price dropped for several days after that sale. Now ETH seems to have found support at $2.400. Some analysts believe the ETH price will rise if bitcoin starts trending up again. In fact, there is a high chance that ETH will flip bullish once bitcoin/USDT has recovered and risen above $60,000, a key resistance level. At the time of writing bitcoin is trading at $59,625 BTC/USDT at Gate.io.
It is important to note that it is not the first time that the Ethereum Foundation’s sale of a large quantity of ETH has led to sharp price fall. For example, after it transferred 15,000 ETH on 6 May 2023 that caused a 16% price drop within a month. However, the effects continued for the next three or so months.
Ethereum Short Term Price Projection
ETH’s next upward price move is likely to be very strong considering that it has cleared the sell-side liquidity that formed before 12 August. Probably, the first destination for the ETH price is $2,618 which was the last strongest support before its breakdown. Another good sign for a strong bullish trend was the recent large scale ETH buying activity. Sadly, if ETH fails to flip bullish its price may fall by around 11% towards $2,190 the next strong support level.
Whereas the short term charts are showing bearishness the higher ones are bullish. Let’s compare the weekly ETH chart with the monthly one.
Looking at the two charts above, we can see that the last candles are bullish ones. On the weekly chart there is a solid marubozu candle which is a bullish reversal signal if it is at the bottom of a trend. On the monthly chart (right) there is a pin bar although it is not pronounced. However, that pin bar might still be under development. The point here is that pure price action is indicating a bullish future.
Despite the above bullish indications, the Ichimoku cloud, which is a normally reliable indicator, is showing a bearish future. The future Ichimoku cloud is red, showing a possible downward price trend.
With the current mixed ETH market signals there is a need for investors to remain cautious. Generally, though, most leading cryptocurrencies are currently in the red.
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