Ethereum price is poised for a decline as on-chain data shows negative bias

Ethereum's (ETH) price is set for a downturn as it approaches its key resistance area of around $2,843. At the time of writing on Thursday, it is trading at $2,658, down slightly by 0.2%. On-chain data further supports a bearish outlook, highlighted by a positive spike in Ethereum's Exchange Flow Balance and a decline in development activity.

Additionally, Lookonchain data shows that ETH founder Vitalik Buterin has deposited $534,000 worth of ETH into the Kraken exchange, potentially heightening selling pressure and contributing to a bearish outlook for Ethereum in the coming days.

Ethereum price is set for a decline as it approaches key resistance barrier

Ethereum is currently revisiting its 50% retracement level of $2,843 (calculated from the swing high of $3,562 on July 22 and the swing low of $2,124 on August 5). This retracement level aligns closely with the daily resistance at $2,927, marking it a crucial resistance area. As of Thursday, Ethereum is trading at $2,658, down slightly by 0.2%.

If Ethereum's price fails to rise above $2,843, it could drop by 20% from the current trading level of $2,658 and reach its weekly support level of $2,118.

On the daily chart, the Relative Strength Index (RSI) and Awesome Oscillator (AO) trade below their neutral levels of 50 and zero, respectively, suggesting an impending bearish trend.

ETH/USDT daily chart

Santiment's Exchange Flow balance for ETH shows the net movement of tokens into and out of exchange wallets. A positive value indicates more Ethereum tokens entered than exited exchanges, suggesting selling pressure from investors. Conversely, a negative value indicates more ETH left the exchange than entered, indicating less selling pressure from investors.

In Ethereum's case, the Exchange Flow balance spiked from -62,018 to 20,707 between Tuesday to Wednesday. This positive spike generally suggests increased selling activity among investors.

ETH Exchange Flow Balance chart

Additionally, Ethereum's Development Activity metric tracks the frequency of project development events recorded in the public GitHub repository over time.

A rise in this metric suggests continuous endeavors to uphold, innovate, and improve the protocol, which is generally seen as favorable by investors and stakeholders. Conversely, a decline in the metric might raise apprehensions about the project's endurance, capacity for innovation, and engagement with the community in the foreseeable future.

In Ethereum's case, the index dropped sharply from 265 on Wednesday to 257 on Thursday, continuing a downward trend since mid-July. This indicates a steady decline in Ethereum's development activity and suggests a bearish outlook for its price.

ETH Development Activity chart

Despite the bearish signals from technical analysis and on-chain data, if Ethereum's price manages to close above the July 29 high of $3,396, it will create a higher high on the daily chart, potentially leading to a 5% rise to retest the July 22 high of $3,562.