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Ethereum’s recent price action has raised significant concerns among investors, especially as it approaches critical support levels amidst mounting bearish sentiment.
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A notable 7.40% drop on February 28 has placed Ethereum (ETH) back in the spotlight, resulting in considerable liquidations and fracturing investor confidence.
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According to 0xLouisT, a prominent crypto investment manager, Ethereum’s social sentiment is “at its lowest in the past 12 months,” indicating a widespread bearish outlook among traders.
This article explores Ethereum’s current price challenges, critical support levels, and market sentiment trends that could impact future performance.
Ethereum’s Weekly Close Signals Potential 2-Year Lows
The current ETH price trajectory indicates a troubling trend, having fallen 24.50% over the past week, marking its worst weekly performance since 2022. A pivotal moment is approaching, as a weekly close beneath $2,300 would represent the lowest close since November 2023, effectively establishing a two-year low.
As depicted in the latest Ethereum weekly chart, there is compelling evidence that the top altcoin is on track to close below its 200-weekly exponential moving average (EMA). This key indicator has historically tracked Ethereum’s bottom range closely. Remarkably, since 2020, ETH/USD has closed below the 200-weekly EMA level only 39 times out of a possible 268 weeks—representing a mere 14.55% of the time.
With these historical trends in mind, it raises the possibility that Ethereum could reclaim a position above the EMA level within the next few weeks. However, concerns are mounting as a double-top pattern appears to be solidifying. A close under $2,100 would validate the neckline of this pattern, significantly heightening the risk of a steep decline towards a potential support level at $1,500.
Market Perspectives on Ethereum’s Downward Trend
Notably, investor Jason Pizzino has weighed in, suggesting that a close below the $2,000-$2,100 range would signal further trouble for Ethereum. He emphasizes that maintaining a value above $2,000 is crucial to invalidate this double-top pattern observed in the charts.
Cost-Basis Distribution Highlights Key Price Levels
While Ethereum strives to sustain its position above $2,000, insights from Glassnode reveal that the current cost-basis distribution (CBD) price is notably lower, around $1,890. This figure is not static but rather a reflection of the range of prices at which the ETH was last transacted on-chain.
A cost-basis distribution price of $1,890 suggests that should price weakness continue, a retest of this value could be imminent. Additionally, crypto trader Morin highlighted that a significant demand zone for ETH exists between $2,100 and $1,900, where the drawdown may be contained as bearish pressure potentially subsides.
Investor Behavior Amidst Price Corrections
Conversely, Leon Waidmann, head of research at OnchainHq, pointed out a noteworthy trend: Ethereum exchange balances are decreasing even as the price corrects. This trend suggests that investors may still hold confidence in ETH, choosing to accumulate within critical demand zones. As prices falter, such investor behavior may provide resilience against further declines.
Conclusion
In summary, Ethereum faces a challenging landscape with pivotal price levels to watch, especially as it flirts with two-year lows. A continued close under the $2,000 mark could lead to significant declines, while historical resistance levels—especially the 200-week EMA—offer potential points for recovery. Investors should remain cautious but aware of potential opportunities as market sentiment evolves.
