• Ethereum fees jumped above $7 as ETH price went down.
  • The coin may retreat to $400 before the recovery is resumed.

At the time of writing, Ethereum (ETH) is trading at $520. The second-largest digital asset, with the current market capitalization of $59 billion and an average daily trading volume of $30 billion, has lost over 12% on Thursday. However, it is still in a green zone on a week-to-week basis.   

The coin hit a new multi-year high at $623 on November 24 before profit-taking, and a major downside correction across the cryptocurrency market pushed it back below $600.

Trading fees go ballistic

While the price was in free fall, trading fees on the Ethereum blockchain skyrocketed to $7.7. The increased network activity may cause a sudden spike in fees as many traders rush to the close positions amid the sell-off. 

Ethereum's average transaction fees 

Ethereum's average transaction fees 

As FXStreet previously reported, high ETH transaction fees undermine many projects that run on the Ethereum blockchain. The recent DeFi boom has caused a massive spike in commissions traders had to pay for swapping their coins, making small payments economically unviable. 

The correction might be short-lived

Meanwhile, some experts believe that the downside correction will be short-lived as the bigger picture remains unaffected by the sell-off. A popular trader Michaël van de Poppe noted that ETH would resume the growth soon. 

From a technical point of view, ETH/USD may continue the retreat towards the local support of $480. This barrier served as strong resistance in September and mid-November. Now, it is reinforced by the 12-hour SMA50. If this area is broken, the correction may gain traction with the next focus on $400 (12-hour SMA200).

ETH/USD 12-hour chart

ETH/USD 12-hour chart

The In/Out of the Money Around Price (IOMAP) model also shows a significant wall around that level. About 680,000 addresses bought nearly 1.3 million ETH between $470 and $490, meaning that the selling pressure may slow down here. 

ETH's In/Out of the Money Around Price" (IOMAP)

ETH's In/Out of the Money Around Price" (IOMAP)

On the other hand, the recovery attempts may be discouraged by a considerable supply wall ahead of $550 as over 430,000 addresses purchased nearly 7 million coins there. A sustainable move above this area is needed for the upside to gain traction and take the price back above $600.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

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