Ethereum’s price has recorded impressive gains over the past week. Now, that might look promising at first glance. However, this outlook couldn’t be further from the truth as on-chain metrics reveal the possibility of stunted growth for the cryptocurrency market’s favorite altcoin – ETH.
Problems and Obstacles Stacked Against ETH
Despite rallying around 21% over the past week, Ethereum volume appears to be invisible. A price surge without volume tracking indicates a false run that is waiting to be reversed.
The on-chain volume for ETH has been trading at 12.93 billion, which is well below the 200-day moving average (MA) at 14.2 billion. This decline in volume, leading to a move below the 200-day MA, has been a persistent trend since 4 March. This seemed to be a sign of lacklustre interest from investors. Hence, the recent leg-up is likely to come undone the first chance it gets.
The 365-day Market Value to Realized Value (MVRV) model is used to assess the average profit/loss of investors who have purchased ETH tokens over the past year. A negative value below 10% indicates that short-term holders are selling at a loss and this is usually where long-term holders tend to accumulate since the risk of selling is relatively low. Therefore, a value below -10% is often referred to as the “opportunity zone”.
At press time, the 365-day MVRV was at –9.3% revealing that long-term holders have been accumulating for a while. Although the index could move to zero, a further ascent seems unlikely considering past data.
Therefore, the rise in Ethereum price remains limited and lends credence to the technical outlook.
While these two metrics point to the possibility of a lack of momentum for Ethereum’s price, the supply distribution index shows a clear sign of why an uptrend is unlikely for ETH.
The last factor
In the past three months, the number of whales holding 100,000 to 1,000,000 ETH has increased from 145 to 140. Simply put, five holders unloaded their holdings and left the Ethereum network.
Moreover, the whale category holding between 1 million to 10 million ETH tokens has dropped by two. What this means is that these long-term investors have also gotten rid of their holdings or booked profits.
These activities of whales or institutional investors reveal that they are not optimistic about the performance of Ethereum prices in the near future. Ergo, this is the technical outlook tailwind for ETH.
