Ethereum Sentiment Reaches Yearly Low, But Whale Activity and Network Upgrades Suggest Possible Reversal

• Ethereum sentiment has reached a one-year low; however, increasing whale activity suggests a potential bullish reversal is on the horizon.

• Despite the current bearish outlook, significant whale accumulation might indicate renewed confidence among institutional investors.

• According to a recent COINOTAG report, “Extreme bearish sentiment is often followed by a market rebound, making this an optimistic period for contrarians.”

This article explores the recent decline in Ethereum sentiment, the role of whale activity, and the implications of the upcoming Pectra upgrade for ETH’s price.

Will ETH hold the key support zone and break out?

Ethereum has been characterized by a descending wedge pattern, facing a prolonged downtrend over recent months. As it tests the wedge’s lower boundary, recent trading data indicates a potential rebound.

As of press time, ETH was trading at $2,303.17, reflecting a 5.72% increase in the last 24 hours, signaling that buyers are stepping in at crucial support levels.

Should ETH sustain its upward trajectory, critical resistance areas at $2,540 and $2,847 deserve particular attention. A breakout beyond these thresholds could indicate a bullish reversal, with potential targets of reaching $3,476 in the near term.

Conversely, any failure to hold support in the $2,200–$2,100 range may trigger further declines towards $2,000.

Source: TradingView

Are large transactions signaling whale accumulation?

Recent on-chain analyses indicate a 4.75% uptick in large transactions, signaling increased interest from institutional investors. This rise often aligns with price recoveries, as major players tend to accumulate assets during times of market fear.

Interestingly, when large investors gather ETH at essential support levels, it can lead to a supply squeeze, potentially igniting bullish momentum. If this pattern continues, Ethereum could witness significant price movements, challenging key resistance levels.

Source: IntoTheBlock

ETH addresses are rising despite the price slump

Notably, there has been a persistent increase in daily active Ethereum addresses, which reinforces the idea of heightened network activity. In the last week alone, new addresses grew by 2.96%, while active addresses saw an uptick of 2.89%, and zero balance addresses increased by 2.27%.

This upward trend in active addresses often precedes price recoveries, reflecting greater user interaction with the Ethereum network. If sustained, this may position Ethereum favorably for future growth.

Source: IntoTheBlock

Will the Pectra upgrade fuel Ethereum’s next breakout?

In other developments, Ethereum’s Pectra upgrade has been successfully implemented on the Sepolia testnet, representing a significant milestone for the blockchain.

This upgrade is designed to optimize staking, improve scalability, and serve as a pathway for future adoption of staking-integrated ETFs, targeting institutional investors.

However, reports of technical issues with the Holesky testnet upgrade have caused delays. Should these concerns be adequately addressed, it may attract increased investor interest and elevate network activity.

A successful deployment of the Pectra upgrade on the mainnet could act as a confidence booster and serve as the catalyst for Ethereum’s next rally. The interplay of current negative sentiment, coupled with evidence of rising transactions and user engagement, creates a ripe environment for a market reversal.

Conclusion

As Ethereum navigates through this turbulent market, traders and investors are urged to monitor key support and resistance levels closely. The ongoing whale accumulation, party-by-party rise in active addresses, and the upcoming Pectra upgrade suggest that Ethereum is at a pivotal moment. Maintaining key support will be crucial in determining whether ETH can initiate a significant price rally in the near future.