Ethereum (ETH) seems intent on an upside push, in spite of serial FUD stemming from Celsius sell-offs, but is this seemingly decisive move a fools’ rally?
Following on from yesterday’s Ethereum price analysis, which explored the make-or-break posturing of Ether’s week of consolidation above $1,800 – price action has seen an uptick.
An important shift is underpinning Ether’s ongoing movements, escalating Ethereum gas fees are putting a strain on users.
This is driving a new pattern; a marked shift of assets to the more cost-efficient Binance Smart Chain (BSC).
The disparity in fees—43 gwei (roughly $1.59) on Ethereum for simple transfers versus 3 gwei on BSC—is a financial game-changer for many.
This divergence has been further fuelled by the recent PEPE token frenzy, which has pushed Ethereum’s gas fees even higher.
The Ethereum community’s scalability solutions, including sharding and layer-2 options, are eagerly anticipated, but until they’re fully operational, BSC provides a viable alternative for those fleeing Ethereum’s lofty transaction costs.
Ethereum (ETH) Price Analysis
Now trading slightly higher at a current price of $1,827.45 (a 24 hour change of +0.29%) – the strong footing of ETH’s consolidation has seemingly primed a re-test of local resistance from the steadily declining MA20.
As Ether fights to push up, everything is to play for, as ETH still faces a sink-or-swim decision heading into Friday.
With price action still flying high above the MA200, which has seemingly converged with Ethereum’s lower trend line – traders are desperately seeking clarification.
The RSI provides a strong indication, still reading as an oversold signal at 42 (a slight cool down since Yesterday).
This bullish reading suggests that Ethereum is likely to come up to retest localised resistance from the MA20.
In contrast, the MACD continues to paint a bleaker picture – tumbling to a -3.05 overnight – as resistance around the MA20 proves a tough nut to crack.
Ethereum (ETH) On-Chain Analysis
To further clarify the direction of future price movements it is useful to take consideration of on-chain flows and open interest levels, which can help to identify potential sell-offs or accumulation periods for Ethereum.
Exchange Net Position Change (which represents the 30D change of supply) continues to depict an emerging and deepening accumulation window, now in its 14th day of growing net outflows – this paints a picture of a growing rush to accumulate Ethereum at prices (indicating that market participants believe price is likely to go up from here).
Despite the image of a deepening accumulation window across a 30d average, a closer examination of Net Transfer Volume from/to Exchanges suggests that outflows actually reduced last night with only -20,348 ETH ($37m) moved out of exchange wallets (marking a -43% decrease compared to the outflows of the day before).
This could provide some cause for concern, despite the ostensible deepening accumulation window from Exchange Net Position Change, this shows a fleeting confidence in Ethereum at these price levels.
Watch Net Transfer Volume carefully over the coming days to see if decreasing outflows reverse to net inflows – which could suggest a sell-off is coming as prices push higher.
Indeed, typically On-Chain, when Ethereum pushes above $1,900 – Net Unrealized Profit Loss (NUPL – which measures the amount of ETH in profit) switches from ‘hope-fear’ to ‘optimism anxiety’ – denoting a critical level at which NetFlow commonly reverses.
However, curiously NUPL – which appeared to rising towards ‘optimism – anxiety’ yesterday – has now seen a downtick despite the upside pressure in price action.
This gives much needed breathing room for traders, however, could also raise a red flag depicting more traders being pushed underwater – further confirming the importance of the $1,800 price level.
And in spite of the clear accumulation window revealed by exchange outflows, a glance at the number of addresses with a balance >32 ETH (node operator requirement) highlights more cause for concern.
Overnight a further fifty >32 ETH wallets sold off their stacks losing whale status, this suggests that the accumulation window is being driven not by whale accumulation but instead retail traders.
With whales still in a clear distribution phase, a reversal of net outflow could come quicker than we expect, with the decline in whale addresses suggesting the bigger market participants believe there will be an opportunity to buy in lower.
Ethereum (ETH) Open Interest Analysis
Turning our attention to Ethereum’s open interest levels (the number of open derivatives contracts on the market), across all exchange markets there is $5.99bn on the table underpinning Ether derivatives markets.
A very minor increase overnight provides little cause for concern, as Open Interest levels still sit below the critical $6.5bn identified yesterday as a key zone for market makers to make waves (to flush out overextended open interest).
Of the open interest on the table, traders are still pretty evenly divided, with a slim but growing majority leaning long as the ratio sits at 1.0117 (representing 50.29% taker buy positions).
This suggests traders have a mixed view of short-time frame price action, with a minor bullish divergence in sentiment.
Ethereum (ETH) Price Prediction
Yesterday’s analysis outlined two potential outlooks for Ethereum price action.
In the first scenario, On-Chain accumulation continues to deepen (driving price up the critical level around $1,900) – if this is matched with an uptick of Long Open Interest to 6.5bn then there could likely be a seismic move to the downside (flushing out long interest).
However, if Ethereum accumulation fails to push price higher to $1,900 then Open Interest is likely to stack up into taker sell positions – if this occurs and open interest rises above 6.5bn then there could likely be a significant move to the upside (flushing out short interest).
As it stands the Ethereum price action seems to be leaning towards the first scenario, despite the revelation from Net Position Change suggesting that outflows are shrinking – these are still outflows, which will push price up.
And with technical structure suggesting an imminent retest of local resistance from the MA20, price is likely to move to the upside on the short-time frame – however, the image of whale wallets still in distribution suggests that the first scenario could be on the cards. With a run up to $1,900 rejected in a seismic dump to a lower price range a potential outcome.
With this in mind, Ethereum’s upside target sits above the MA20 with a clean break above the $1,900 level to $1,915 (a possible +4.73% move).
However, downside risk could see price tumble to a lower support level at $1,750 (a potential -4.29% fall).
This leaves Ethereum with a Risk: Reward ratio of 1.1 – a worse entry than yesterday, but nevertheless an entry still characterised by immediate upside potential.
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This article was written for Business 2 Community by Sam Cooling.
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