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January 18, 2022

Ethereum Analysis 01/18

As it bounced off a key support level, the price of Ethereum saw a minor uptick. This bullish surge fizzled out, resulting in a sharp drop back to the aforementioned footing. With the chances marginally tilted in favor of bulls, ETH considers its next line of action.

From January 10 to January 12, the price of Ethereum increased by 16 percent, reaching a new high of $3,413. A daily support zone stretching from $2,927 to $3,151 was left behind by the rise. Surprisingly, the weekly support level of $3,061 is also located in this area.

ETH retraced downward due to a lack of impetus, retesting the support zone. If sidelined buyers join this upswing, there’s a significant probability the altcoin would rise 16 percent to retest the lower boundary of the two-day supply zone, which runs from $3,675 to $3,862.

To reach the indicated supply zone, however, Ethereum must first break through the 200-day Simple Moving Average (SMA) at $3,480.

If buying pressure rises dramatically, ETH may be able to break over this barrier and retest the $4,000 psychological barrier or the weekly resistance barrier in the near future. This would be a 28 percent increase in price.

While a retest of the $4,000 Ethereum price is possible, according to IntoTheBlock’s Global In/Out of the Money (GIOM) model, it is improbable. Approximately 5.42 million addresses that acquired roughly 21.41 million ETH are “Out of the Money” between $3,343 and $3,869 USD.

This cluster of underwater holders attempting to break even is likely to put selling pressure on an uptrend. As a result, breaking out of this cluster would necessitate enormous purchasing momentum, which is quite unlikely.

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According to the 30-day Market Value to Realized Value (MVRV) model, the upswing that started here will be a short-term bounce. This on-chain measure is used to calculate the average profit/loss of ETH investors over the previous month.

This indicator is hanging around -10%, indicating that short-term investors who bought ETH are losing money and are hesitant to sell. This location is known as a ‘opportunity zone,’ since long-term investors tend to gather here, causing a reversal.

As a result, investors should expect Ethereum’s price to reverse course from its current levels.

The recent drop in on-chain volume for ETH from 28.78 billion to 11.93 billion over the past week also discourages a significant surge for Ethereum pricing. This 58.5 percent dip implies that investors are uninterested in ETH at present price levels, as well as a general decline in user activity on the Ethereum blockchain, implying a drop in interest.

The Network Growth chart for Ethereum pricing, which shows a strong downturn from 193,000 on October 29, 2021 to 94,300 on January 17, indicates the diminishing user interest much more clearly. The fact that the number of new addresses established on ETH has dropped by 51% indicates that investors have moved on and are no longer interested in the smart contract token at current prices.

While the outlook for ETH appears to be modestly optimistic, a breakdown of the immediate support zone, which extends from $2,927 to $3,151, will result in a lower bottom, invalidating the bullish thesis. This scenario could cause Ethereum’s price to drop 8% and retest the $2,712 weekly support level.