Ethereum’s Price Drop Leaves 64% of Investors in Losses

Ethereum has experienced a continued decline in recent trading sessions, with significant inflows to exchanges indicating that many traders are offloading the altcoin. The drop in Ethereum’s price breached crucial support levels, triggering panic selling among traders. This panic selling could worsen the decline, setting off a downward spiral if traders at these levels continue to sell off their holdings.

Analyzing Ethereum’s price trend over the daily timeframe revealed a notable downtrend over the past four days, with a substantial drop on August 2, leading to a 6.71% plummet in price from around $3,200 to approximately $2,985. The cumulative decline over the four days exceeded 10.5%, with the latest session contributing significantly to this downturn.

Previously, the support level for Ethereum stood at $3,200, but recent market movements have breached this threshold. The new support region is now identified between $2,900 and $2,700. Additionally, the Relative Strength Index (RSI) around 34 indicates a strong bearish trend, as RSI levels below 30 are considered oversold. A break below a key support level could result in further declines if the new support zones fail to hold.

The recent price decline in Ethereum has impacted the profitability of holders, with data from IntoTheBlock showing that over 1.7 million addresses purchased ETH below the critical $3,000-mark. However, as market prices dipped, this number decreased, leaving approximately 15.12 million ETH addresses “out of the money,” representing over 64% of all Ethereum addresses. Conversely, about 8.08 million addresses remained “in the money,” holding ETH acquired in the $2,600 to $2,900 range.

The fate of Ethereum’s price hinges on the actions of holders, particularly those “in the money” who are balancing between profitability and potential losses. If these holders start panic selling to avoid further losses, it could trigger a domino effect, driving Ethereum’s price down further.

Analyzing Ethereum’s netflows, CryptoQuant data indicated significant inflows to exchanges, with nearly $216 million worth of ETH moved to exchanges in the first two days of August. This influx suggests that many traders are selling off their holdings to capitalize on current prices or minimize losses, adding to selling pressure that could contribute to a downward price trend.

For Ethereum’s price to stabilize, there needs to be a reversal in the trend of net inflows to exchanges. The current market conditions indicate a delicate balance that could sway Ethereum’s price in either direction based on traders’ actions and market sentiment.