Ethereum price reeling from market decline on Monday, causing it to once again lose the $1,900 support level, sparking speculation about the near-term market outlook. Following this pullback, investor sentiment is moving toward a more cautious state, keeping market momentum firmly bearish.
Bearish momentum persists in the Ethereum market
Just as the broader cryptocurrency environment has become very bearish, Ethereum’s market momentum remains heavily biased to the downside. Some of the indications of this scenario include signs of capitulation through the altcoin and network leader.
Joao Wedson, author and founder of on-chain data analytics platform Alphractal, has shed light on the current state of the ETH market after reviewing several metrics. Key indicators, such as realized/unrealized losses and falling demand indicators, indicate that an increasing number of investors are exiting their positions due to pressure.
Data from Alpha AI shows that there is an increase in long positions while the Coinbase Premium Index demonstrates a decline. The increase in leveraged long positions indicates that traders are betting that recent weakness will give way to bullish momentum and are preparing for a rebound.
At the same time, on-chain data is showing signs of capitulation. Current flows indicate defensive behavior by investors and a loss of conviction rather than news accumulation. Wedson also highlighted other key areas and indicators that reinforce this idea of bearish market dynamics for ETH.
The first metric is the Whale vs. Retail Delta, which now shows that retail investors are positioning themselves heavily on the long side. The liquidation level heat map reflects high leverage in the system. ETH Open Interest (OI) is in decline, with active addresses constantly disappearing.
On-chain volume is showing caution as activity declines, and NUPL is currently showing signs of capitulation. Given these bearish signals, Wedson pointed out that the next decline could stimulate the formation of a base with high probability. This implies that Ethereum could begin its accumulation phase in the short term.
A return to lower Bollinger bands
In the current state of the market, Ethereum price appears to be moving in the same direction as Bitcoin price. According to According to market analyst and investor Cantonese Cat, both cryptocurrency assets have just reached their lower Bollinger bands as they contract for support. However, the direction has not yet been determined for the Bollinger band squeeze.
As a result, Cantonese Cat noted that bulls may want more sideways to make the 20-day SMA flatter, which would present a better chance of reversing it as support. Meanwhile, bears would expect further follow through on the current price action and a lower low to occur soon, but that has not happened yet.
At the time of writing, the ETH price was trading at $1,826 after falling more than 3% in the last 24 hours. Despite the slowdown in price action, its trading volume has turned bullish again, increasing by over 29% during the same period.
Featured image from Pixabay, chart from Tradingview.com
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