YEREVAN (CoinChapter.com) – Ethereum token Ether (ETH) traded at just below $1,400 on Jan 12, after a near-20% upside move month-to-date. Moreover, data from the crypto analytical platform Santiment testified to the growing accumulation among ETH shark addresses, despite the abundance of bearish cues.
Ether (ETH) sharks are on the move
In detail, sharks are wallets holding approximately 100 to 10,000 ETH. According to the Santiment report, over 3,000 new shark addresses appeared in the previous ten weeks, bringing the total number to over 48,500 addresses, the highest since early 2021.
Moreover, Santiment asserted that the shark addresses are a particularly important driving force behind the price increases and declines. Could the accumulation drive the price even higher?
Long-term predictions favor the bulls.
Ryan Selkis, the founder and CEO of the market intelligence platform Messari, predicted a profitable year for Ethereum. In his latest report, the analyst asserted that the Merge to proof-of-stake was “spectacular,” albeit it took six years and was “boring” to watch.
The fact that [the Merge] went off without any major hitches bordered on miraculous, and I will be the first to admit that it was completed much sooner and with less drama than I thought it would be. Vitalik and the Ethereum Core team deserve major kudos.
Also read: Could Bitcoin Price Drop to $13K in Q1/2023?
However, it is important to remember that events influencing short-term prices might contradict long-term predictions. Ethereum uptrend also took cues from Bitcoin, which highly depends on the Fed’s interest rate hikes and the possible recession.
Notably, along with the macro market conditions, several on-chain metrics tell the bulls to pace themselves.
Bearish factors could hinder the ETH price appreciation
For example, another analytical platform, Glassnode, pointed out that Ethereum’s Network Value to Transaction (NVT) signal reached a 4-month high.
NVT signal bearish for Ethereum
In short, Network Value to Transactions (NVT) Ratio describes the relationship between market cap and transfer volume. Per analyst Willy Woo, its creator, NVT can be considered analogous to the PE (price to earnings) Ratio used in equity markets.
A growing NVT indicates that investors are pricing Bitcoin at a premium. Per Glassnode’s definition, NVT grows when “Market Cap growth outpaces utilization of on-chain transaction volume and value settlement.” High NVT Ratio values have historically coincided with market tops and periods of overvaluation.
Given the upward trajectory of the current NVT reading, a leg down might be in the books soon enough.
Ethereum exchange inflow on the rise
Another bearish factor is the growing exchange inflow, which stood at a one-month high of 2,460 ETH on Jan 12.
Generally, exchange inflow is a bearish factor, as it testifies to the traders’ reluctance to store their ETH. More funds on exchanges mean more investors consider liquidating. In the current bearish market, the traders’ caution is understandable. Moreover, the charts paint a gloomy picture as well.
Ether technicals spell doom.
Ethereum, much like Bitcoin, has been trading in a bearish ‘descending channel’ pattern since mid-May. The pattern features a down-sloping resistance and flat support that form a triangle, connecting the swing highs and lows.
The bearish pattern expects a plunge equal to the setup’s maximal height once ETH confirms the triangle by dropping below the support. Notably, that has not happened yet. However, the ETH/USD price action retested the triangle’s resistance on Jan 12, suggesting an upcoming downward correction.
In case of a confirmation, the triangle threatens to take the ETH price below $100. Furthermore, the token’s decreasing trading volumes and the ‘overbought’ relative strength index intensify the fears, albeit not necessarily expecting ETH to drop to its 2018 lows.
Despite Shark address accumulation, on-chain metrics, technicals, and macro factors are still against the largest altcoin. However, the crypto market can be unpredictable. Thus, investors should carefully weigh all pros and cons before placing their bets.
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