Ethereum faces steep correction as whales opt for profit-taking

Ethereum (ETH), the second-largest crypto asset by market capitalization, is currently in a state of decline. ETH price is down 7% on the day and almost 20% on the week, wiping out recent gains. On-chain data insights reveal that large-wallet investors, popularly known as whales, are shedding their Ethereum holdings and taking profits, increasing the selling pressure on ETH. 

Also read: Grayscale amends Spot Ethereum ETF filing, ETH trades sideways below $3,700

Ethereum price crumbles under rising selling pressure

Data from crypto intelligence tracker Spotonchain shows that three large-wallet investors have taken profits on their Ethereum holdings in the past four days. The three Ethereum whales sold 26,946 Ether, worth $95.7 million, and took $39 million in profits. The transactions took place on Binance between March 15 and 19. 

As whales shed their Ether, the altcoin’s supply on exchanges has increased. Between March 15 and 19, ETH reserves on exchanges are up from 13.92 million to 14.43 million. An increase in supply on exchanges implies there is a higher volume of Ether available to sell.

As seen in the Santiment chart below, Ethereum price declined alongside this supply increase, supporting the thesis that profit-taking has partly driven the drop in Ether’s price.

Supply on Exchanges. Sources: Santiment

Ethereum price could sweep $2,900

Ethereum price is strongly correlated to Bitcoin. Therefore, the price decline seen in BTC likely helped Ethereum’s price to drop as well alongside factors like profit taking and whale activity. 

ETH price is on the verge of dipping into the range between $2,717 and $3,200, represented by the Fair Value Gap (FVG) on its monthly chart. Once the altcoin collects liquidity in this zone,  its price could rebound towards resistance at $3,500 (represented by R1 in the chart below). 

The ETH/USDT 1-day chart shows that bears are taking over as the Moving Average Convergence/Divergence indicator flashes red bars. The Relative Strength Index (RSI) is at 42.05, close to the neutral zone, meaning ETH is not currently oversold. Should the RSI for ETH drop into the oversold zone, it would give a buy signal for sidelined buyers to step in. 
 

ETH/USDT 1-day chart 

A daily candlestick close below $3,200 (the upper boundary of FVG) would result in a steeper correction that could send ETH price towards support at $2,166.