- Ethereum extended Thursday’s bloodshed to the weekend, but the 100 SMA support held its ground.
- Ethereum fundamental analysis points towards an imminent breakout above $400 and heading to $500.
- Ethereum network continues to grow in terms of new and active adders despite the drop in price.
The smart contract giant has been on a downward spiral since it encountered a barrier at $498.50 (new 2020 high). The first week of September has been bloody not only for Ethereum but also for other major cryptocurrencies like Bitcoin and Ripple. Before the breakdown, ETH/USD maintained an uptrend from the lows of $91.03 (Coinbase) posted in March. However, it is essential to note a period between June and mid-July because ETH and BTC entered into a length consolidation. There was a significant spike in Ethereum correlation ration to Bitcoin price.
The consolidation led to a Bollinger Band constriction, as seen on the ETH/USD daily chart. A squeeze towards mid-July culminated in a massive breakout with Ethereum breaking several barriers; $250 and $300 in July and $400 and $450 in August. The Bollinger Band also shows that the rise to highs of $489 paved the way for high volatility, with most Ethereum wallets being profitable.
Following the selloff experienced last week, the smart contract token fell headfast, unable to embrace tentative support at $450, $420, and $400. ETH took a pit stop at $370 on Friday, but the bleeding continued through the weekend. The second-largest cryptocurrency extended the bearish towards $300, but luckily the 100 Simple Moving Average (SMA) came to the bulls’ rescue.
A recovery ensued, sending Ethereum marginally above $350. However, the seller congestion at the 50 SMA ($375.13) limited further price action eyeing $400. At the time of writing, Ethereum is trading at $342 (marginally above the Bollinger Band daily lower curve). According to the Bollinger Band, volatility is at the highest since the beginning of September.
For now, short term price analysis shows that the path of least resistance is to the south, probably because Ethereum bulls are yet to find critical support from which to stage a rally above the psychological $400 hurdle.
ETH/USD daily chart
Ethereum on-chain data analysis
As per the data provided by one of the leading blockchain on-chain data analysis platforms, IntoTheBlock 648,060, Ethereum addresses are neutral at the current price. In other words, these addresses are neither at a significant loss nor profit as they bought Ethereum at an average price of $356.42. Into perspective, these addresses are unlikely to sell Ethereum at the current price and would instead hold on a reversal above $400.
In/Out of Money chart
Some 2.833 million are currently Out of Money regarding $391.42 (average price ETH investors bought). The purchase at this price level attracted a volume of 7.65 million ETH. Considering the price of Ethereum, it is doubtful that these wallets will dispose of the token. There will be a tendency to hold and buy more as they wait for the price to shoot above $400 and $500.
On the other hand, the number of active addresses continues to grow despite the drop in price. On September 1, when Ethereum traded at $459.32, the network recorded 434,250 active addresses. On the same day, there were 96,610 new addresses. Fast forward to September 6, and the Ethereum network boasted of 544,010 active addresses and 193,920 active addresses. This data shows that the network is still growing, and investors have not lost faith that ETH can continue with the rally to $500.