Ethereum price saw a sharp reversal on Aug 12, plunging 5.7% within 24 hours after peaking at $2,718; on-chain data suggests that the bullish momentum is fading, raising concerns over ETH’s short-term prospects in the week ahead.
Regulatory Boost Fails to Sustain Ethereum Price Rally
Last week’s Ethereum price rally was fueled by several key regulatory developments. The Solana ETF approval in Brazil, Russia’s legalization of crypto mining, and the SEC’s lenient fine created optimism, propelling Ethereum price upward. As shown in the attached ETH/USD price chart, this led to a 27% surge from August 5 to August 11, with Ethereum price climbing from $2,136 to $2,718.
The bullish momentum appeared strong, with the ETH/USD price chart revealing a steady climb as Ethereum broke through multiple resistance levels. Investors were hopeful that these regulatory wins would sustain Ethereum’s recovery, pushing the price further. However, the chart also hints at emerging weakness as Ethereum struggled to maintain the gains, with the price rally starting to flatten near the $2,700 mark.
By August 11, the rally began to lose steam, as evident in the ETH/USD price chart where the candles shortened, signaling waning bullish strength. On August 12, Ethereum price reversed sharply, dropping 5.7% to $2,511. The swift reversal suggests that the market may have overreacted to the regulatory news, leading to a temporary spike that could not be sustained. The chart highlights the pivotal role of resistance at $2,700, where Ethereum faced stiff rejection, sending the price tumbling back toward key support levels.
H2: On-Chain Data Signals Increased Selling Pressure
Ethereum’s recent price decline is mirrored by concerning on-chain data, specifically the sharp increase in staking withdrawals. The second chart, showing Ethereum staking withdrawals, reveals a significant uptick in activity, with over 122,000 ETH withdrawn from staking pools this week. This marks the highest level of withdrawals since May, amounting to approximately $521 million at the 3-day average price of $2,620.
This surge in withdrawals indicates growing selling pressure, as investors choose to unstake their Ethereum, potentially to liquidate holdings. The Ethereum staking flow chart illustrates this trend, with red bars showing a pronounced increase in full and partial withdrawals. The cumulative effect of these withdrawals is an increase in market supply, which could exert downward pressure on Ethereum price.
The data suggests that despite the bullish regulatory news, confidence among Ethereum stakers may be waning. As newly un-staked ETH coins trickles into market, the added supply could exacerbate selling pressure, particularly if demand remains stagnant. This dynamic is critical, as it hints at potential volatility in the coming days, with Ethereum price possibly facing further declines.
ETH Price Forecast: Bears Eye $2,500 Support as Selling Intensifies
As Ethereum price continues to decline, technical indicators point to increasing bearish momentum. The Ichimoku Cloud in the ETH/USD price chart shows a bearish twist, with Ethereum price trading below the cloud. This suggests that the downtrend may continue, with the bears likely targeting the $2,500 support level.
Moreover, the Accumulation/Distribution Line (ADL) on the chart, which tracks the flow of funds into and out of an asset, is showing a decline. This indicates that selling pressure is outweighing buying interest, further strengthening the bearish case for Ethereum price. If Ethereum fails to hold above the $2,550 support level, it could trigger a broader sell-off, with the next major support level at $2,400.
The outlook for Ethereum price remains uncertain as the market grapples with conflicting signals. While recent regulatory developments are positive in the long term, their immediate impact on Ethereum price appears limited. The surge in staking withdrawals, combined with the fading momentum from last week’s rally, suggests that Ethereum may face further downside in the short term.
However, there is still potential for a rebound if Ethereum can hold above key support levels. If the price stabilizes around $2,550 and demand picks up, Ethereum could attempt to retest the $2,600 resistance level. A break above this level could signal a reversal, with the potential to reach $2,718 again.
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