Ethereum Faces Steep Decline as Support Levels Breached Amidst Heavy Trader Sell-Offs

• Ethereum’s price plunges below critical support levels, causing concern among investors.
• Increased inflows to exchanges indicate a significant sell-off of the cryptocurrency.
• Data points to a considerable number of ETH holders now being “out of the money”.

Ethereum’s recent decline has put pressure on key support levels, sparking fears of further drops as traders rush to sell off their holdings.

Ethereum Breaches Crucial Support Levels

In the latest trading sessions, Ethereum has dramatically fallen below its crucial support levels, sparking fears of a continued downturn. On 2 August, ETH plummeted by 6.71%, dropping from $3,200 to around $2,985. This decline was part of a broader downtrend observed over four days, culminating in a cumulative loss of over 10.5%.

New Support Zones Threatened

As Ethereum breached its $3,200 support, new support levels have been identified between $2,900 and $2,700. The Relative Strength Index (RSI) fell to 34, indicating strong bearish momentum, with levels below 30 signaling oversold conditions. If these new support zones fail to hold, Ethereum might experience further declines.

Impact on Ethereum Holders

According to IntoTheBlock, the recent drop has left a significant number of Ethereum holders in a precarious position. Approximately 64% of ETH addresses were “out of the money,” meaning the current ETH price is lower than the purchase price for these holders. Around 8.08 million addresses remain “in the money,” having bought ETH within the $2,600 to $2,900 range. If the market continues to decline, even these holders might start to panic sell, creating a potential cascade effect on Ethereum’s price.

Increased Inflows to Exchanges

Data from CryptoQuant shows substantial inflows of Ethereum to exchanges, with positive netflows of nearly 53,000 ETH on 1 August and almost 19,000 ETH on 2 August. These inflows, worth approximately $216 million, suggest that traders are selling off their holdings either to capitalize on current prices or to cut their losses. This increased selling pressure contributes to the downward spiral in Ethereum’s price.

Conclusion

The sharp decline in Ethereum’s price below its crucial support levels, coupled with significant sell-offs, has put immense pressure on the market. If the trend of positive netflows to exchanges continues and the new support zones fail to stabilize the price, ETH might witness further declines. Investors need to closely monitor these developments to make informed decisions.