Ethereum Open Interest Drops, Will ETH Price Follow Up?


Ethereum (ETH) price, after charting a multi-week high of $1,680, has started a downward journey. Are the bears ready to move and push the price action to a lower support level?

Ethereum price has jumped significantly over the past few days after Ethereum co-founder Vitalik Buterin revealed Ethereum’s updated technical roadmap. Buterin added a new phase to the roadmap aimed at improving censorship resistance and decentralization of the Ethereum network.

A 6% price increase on Friday coincided with plans to protect the Ethereum network from censorship. However, at press time, ETH was trading at $1,575, down 2.65% from the previous day.

Ethereum Price Action Weak

Ethereum bulls did a solid job of pushing ETH price higher towards the $1,680 high over the weekend. The $1,680-$1,700 price barrier eased the coin’s price trajectory even though the price was moving significantly.

Ethereum (ETH) One Day Price
ETH/USDT One Day | Source: TradingView

ETH price made lower highs while the daily RSI saw a sharp reversal before entering overbought territory. While the daily RSI still presents a higher concentration of buyers than sellers, with a bearish trend, sellers can control lower driving prices.

One reason for the weakening of ETH was the dwindling number of active addresses. Data from Glassnode shows that the number of active addresses (7d MA) for Ethereum hit a four-month low of 27,303.357 on 7 November.

Ethereum (ETH) Active Addresses |  Source: Glassnode
ETH Active Addresses | Source: Glassnode

The drop in active addresses eroded market confidence from participants. Ethereum addresses saw a decline of around 14.8% over the past week to 622K, which was a bearish trend as the price momentum weakened.

Additionally, Ethereum’s trading volume (7d MA) also hit a 4-month low. One reason for this could be the relatively high transaction fees of ETH.

Number of Ethereum (ETH) Transactions |  Source: Glassnode
ETH number of transactions , Source: Glassnode

In the past week, ETH weekly trading fees were 19.4% higher than the average. With price action weakening, what to expect from ETH?

Open Interest Takes a Dip

Data from Coinalyze suggested that Open Interest saw a drop of 8.81% on the previous day. Falling prices, as well as a drop in total open interest, could point to disgruntled long position holders being forced to liquidate their positions.

Ethereum Open Interest |  Source: Coinalze
Ethereum Open Interest | Source: Coinalze

Price DAA divergence indicates a major bearish divergence and was trending lower for quite some time. In June of this year, when the ETH chart noted a similar DAA divergence, the price of Ethereum fell by almost 30%.

Ethereum (ETH) Price DAA Divergence |  Source: SanBase
Price DAA Divergence | Source: SanBase

ETH price DAA divergence hasn’t dropped to this level since June.

However, whales holding over 1,000 coins in the market continued to accumulate. Notably, the number of addresses containing more than 1,000 coins of Ethereum reached a one-month high of 6,331.

Number of addresses holding Ethereum (ETH) 1k+ coins.  glassnode
Source: Glassnode

For Ethereum price to move up, will the accumulation be enough to continue the price action?

IntoTheBlock’s in/out of money around price indicator suggests that a significant hurdle for ETH price is at the $1,588 level where 1.56 million ETH is held by 4 million addresses.

Ethereum (ETH) Source: In/out block of money near price indicator
Source: IntoTheBlock

However, since the bearish indicator was more dominant, the $1445 level could act as a strong support, where 7.22 million ETH is held by 4,7250 addresses.

Ethereum price action seemed to be at a crucial crossroads at press time, a bearish pullback could bring ETH price down to $1,400, but the invalidation of the bearish thesis could propel the price above the $1588 level.

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