• Ethereum price retests the $2,927 to $3,151 support zone after the initial attempt failed to catch traction.
  • ETH upside seems to be capped at $3,675 from both technical and on-chain perspectives.
  • A breakdown of the $2,927 barrier will invalidate the short-term bullish outlook for the smart contract token.

Ethereum price witnessed a minor uptrend as it bounced off a crucial support level. This bull rally failed to catch traction, leading to a steep correction back to the aforementioned foothold. Here, ETH contemplates its next course of action with its odds slightly skewed in favor of bulls.

Ethereum price lacks momentum

Ethereum price rose 16% from January 10 to January 12, setting up a swing high at $3,413. The uptrend left behind a daily support zone, extending from $2,927 to $3,151. Interestingly, this area also harbors the weekly support level at $3,061.

Due to lack of momentum, ETH retraced lower, retesting the support zone. If this uptrend sees participation from sidelined buyers, there is a good chance it will propel the altcoin by 16% to retest the lower limit of the two-day supply zone, stretching from $3,675 3,862. 

Ethereum price will need to overcome the 200-day Simple Moving Average (SMA) at $3,480, however, to reach the said supply zone.

In some cases, if the buying pressure sees a massive uptick, ETH could slice through this hurdle and retest the $4,000 psychological barrier or the weekly resistance barrier in close vicinity. This run-up would constitute a 28% ascent.

ETH/USDT 1-day chart

ETH/USDT 1-day chart

While a retest of the $4,000 Ethereum price is optimistic, it is unlikely judging from the IntoTheBlock’s Global In/Out of the Money (GIOM) model. From $3,343 to $3,869, roughly 5.42 million addresses that purchased roughly 21.41 million ETH are “Out of the Money.” 

An uptrend is likely to experience selling pressure from this cluster of underwater holders trying to break even. So, a move beyond this cluster would require massive buying momentum, which is unlikely.

ETH GIOM

ETH GIOM

The 30-day Market Value to Realized Value (MVRV) model depicts that the uptrend originating here would be a short-term bounce. This on-chain metric is used to determine the average profit/loss of investors that purchased ETH over the past month. 

This index is hovering at -10%, suggesting short-term investors that purchased ETH are experiencing a loss and are unlikely to sell. This area is called an ‘opportunity zone’ since long-term holders tend to accumulate here, triggering a reversal.

Therefore, investors can expect Ethereum price to make a U-turn around the current levels.

ETH 30-day MVRV

ETH 30-day MVRV

Further discouraging a massive move for Ethereum price is the recent decline in on-chain volume for ETH from 28.78 billion to 11.93 billion over the past week. This 58.5% decline indicates that investors are not interested in ETH at the current price levels and denotes an overall decline in the activity of users interacting with the Ethereum blockchain, suggesting a drop in interest. 

ETH on-chain volume

ETH on-chain volume

The declining user interest can be seen much clearer in the Network Growth chart for Ethereum price, which shows a clear downtrend from 193,000 on October 29, 2021 to 94,300 on January 17. This 51% nosedive in the number of new addresses being created on ETH suggests that investors are moving elsewhere and are not interested in the smart contract token at the current price levels.

ETH network growth

ETH network growth

While things are looking mildly bullish for ETH, a breakdown of the immediate support zone, extending from $2,927 to $3,151 will create a lower low, invalidating the bullish thesis. This development could trigger Ethereum price to crash 8% to retest the weekly support level at $2,712.

 

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Cryptos feed Join Telegram

Recommended content


Recommended Content

Editors’ Picks

Can Solana price enter a 50% relief rally?

Can Solana price enter a 50% relief rally?

Solana price is in the beginnings of a quick recovery rally that could propel it back to levels that were last seen nearly two weeks ago. Two technicals back the claim for why SOL could be ready for this ascent.

More Solana News

Ethereum Price Prediction: ETH will sweep the lows at $1,500

Ethereum Price Prediction: ETH will sweep the lows at $1,500

Ethereum price displays reasons to believe in a ‘sweep the lows’ event in the coming days. Traders should approach the smart contract blockchain with caution.

More Ethereum News

Assessing the possibility of a 40% upswing for Cardano

Assessing the possibility of a 40% upswing for Cardano

Cardano price is in a spot favorable for the bulls and short-term traders as a rally might be in the works. A minor retracement will allow interested buyers an opportunity to accumulate ADA at a discount before catalyzing an explosive uptrend.

More Cardano News

Bitcoin Weekly Forecast: The last rebound before capitulation

Bitcoin Weekly Forecast: The last rebound before capitulation

Bitcoin price is showing bullish signs in the lower time frames, which can be taken advantage of by traders in the next couple of days. But looking at BTC from the highier time frames suggests that the bottom is not in yet.

More Bitcoin News

Bitcoin: The last rebound before capitulation

Bitcoin: The last rebound before capitulation

Bitcoin is showing bullish signs in the lower time frames, which can be taken advantage of by traders in the next couple of days. But looking at BTC from the higher time frames suggests that the bottom is not in yet.

Read full analysis

BTC

ETH

XRP