- Ethereum price is showing a lack of volatility as it is stuck between the 50, 100 and 200 day simple moving averages.
- Technical and series metrics are pointing to a possible retest of the 200-day SMA at $3,394.
- A daily close below $3,640 would confirm a bearish view and could lead to a move to $3,456 or $3,394.
Ethereum price has been stuck trading between two crucial levels for more than three weeks. The recent drop has brought it close to a vital support barrier, the collapse of which could trigger further crashes for ETH.
Ethereum price needs to make tough decisions
The price of Ethereum and many other altcoins appear to be bullish, especially after the sudden crash on December 3. Further decline in ETH price could see a 50-day cross below the 100-day simple moving average (SMA) resulting in a bearish technical signal called a death cross.
The move could exacerbate the position of the smart contract token, leading to a retest of the 200-day simple moving average at $3,394. However, the 21-week SMA at $3,752 is the deciding factor that will determine whether ETH goes lower – or retests the psychological $4,000 level.
Currently, the price of Ethereum is retesting this barrier in hopes of turning it over to the support level. If successful, ETH will enter a bullish phase and possibly retest the 50 or 100 day moving averages or the level mentioned above.
While such an optimistic scenario is plausible, the upside potential is likely to be capped, indicating that it is inevitable that ETH will revisit the 200-day simple moving average at $3,394. In a dire situation, if this barrier fails to hold, the smart contract token will retest the $3,164 support barrier.
ETH/USDT 1-day chart
The bearish forecast for Ethereum price was reinforced by IntoTheBlock’s Global In/Out of the Money (GIOM) pattern, which shows no immediate support for ETH reaching $3,124.
The model shows approximately 6.97 million addresses purchased with 9.43 million ETH at $3,124, making it a strong line of defense. Anything before that is like walking on thin ice for ETH.
It appears that the bullish trend for ETH has been set at $4,079, with 4.22 million addresses bought and nearly 16.14 million ETH. Any short-term spikes in buying pressure are likely to be met with selling pressure from holders of this level and, therefore, they would like to break even.
Another on-chain metric that explains Ethereum’s lackluster price performance is the Daily Active Address (DAA). The DAA is currently hovering at 179,000 which is well below the 50 SMA and the 200 SMA, resulting in the death cross on December 26, 2021, indicating a prolonged decline in user interest.
Further signs of a possible crash for Ethereum’s price are being shown by the market cap to realized value (MVRV) model, which is hovering at 24.26%.
This on-chain metric is used to determine the average profit/loss of investors who have bought ETH over the past year. The current value indicates that these owners are profitable and could be a source of selling pressure if they decide to part with ETH.
Hence, any potential flash failure of the smart contract token cannot be nullified.
ETH 365-day MVRV
This bearish outlook can also be clearly depicted by the supply distribution chart, which acts as a proxy for institutional investment interests. This shows that whales with between 10,000 and 100,000 ETH have been offloading their assets for more than two months.
The number of these investors decreased by 54, from 1,197 on October 15, 2021, to 1,143 on January 3. This 4.5% drop indicates that market participants are likely booking profits in anticipation of a further drop in the price of Ethereum.
ETH supply distribution
While things look bleak from a long-term perspective, a decisive daily candlestick close above $4,100 would establish a higher top and signal that buyers are ready to go the extra mile. A swing high above $4,500 will invalidate the bullish theory and create a FOMO among buyers and likely push Ethereum price to create a new all-time high at $5,000.