Amid bearish crypto market conditions, Ethereum’s price risks a steep correction due to a spike in ETH held on crypto exchanges and an uptick in profit-taking. If this selling pressure continues to increase, ETH could drop as low as $2,600.
Let’s examine technical and on-chain analysis to determine Ethereum’s (ETH) health and what’s next.
Ethereum Price Risks Correction As 110,000 ETH Flows to Exchanges
Ethereum price has crashed 25% from its yearly high of $4,107 but has recovered to $3,358, where it currently trades. Since ETH trades between two key make-or-break hurdles at $3,613 and $3,029, there is no directional bias yet. If ETH overcomes the former hurdle, it could kickstart a rally to the upside. On the other hand, a breakdown of $3,029 could result in a crash.
ETH/USDT 12-hour chart
Considering the supply of Ethereum held on exchanges has seen an uptick of 110,000 ETH, a potential selloff could be around the corner. Typically, an increase in ETH held on centralized platforms could be for selling, aka booking profits or as collateral. This metric increases during the cycle top as more investors want to book profits. The supply held on exchanges reduces at the bottom as investors do not look to sell and instead secure their holdings on cold wallets.
As a result, ETH prices could continue to decline in the near future.
Ethereum Whales Book Profit After Recent Crash
The Network Realized Profit/Loss indicator saw massive upticks on December 23 and 26, suggesting massive profit-taking activity from holders. Positive spikes note profit-taking and negative spikes indicate capitulation.
If NPL is negative after a crash, it indicates that investors are capitulating and is a good area to buy. On the contrary, a positive spike after a drop suggests that holders are not confident in a future rally and are expecting a further decline in Ethereum prices.
ETH NPL
All in all, Ethereum price prediction suggests that a drop is likely. As noted, Ether needs to break the $3,029 support level to kickstart a correction that knocks it down to $2,600. Supporting this bearish outcome is ETH flooding on exchanges and profit-taking activity.
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