Ethereum Plunges 27% in a Month as ICO Whale Resurfaces to Stake $120M
Market Structure Shifts Lower
- Ethereum price recovery attempts meet resistance between $3,061 and $3,185.
- RSI signals oversold conditions at 33.51, suggesting a potential relief bounce.
- ADX at 42.59 indicates a mature downtrend nearing exhaustion.
Ethereum’s price had surged by over 30%, at the time of writing in the month of August to trade for $3,916 – a high not seen for over three months. The lofty $4,000-mark is untouched, yet the current recovery sends a glimmer of hope among the altcoin investors. However, since the month began, Ethereum was looking at a three and a half percent deficit. Further, this loss was backed by an ongoing downtrend ADX, as the indicator posted rising strength on the daily chart.
Ethereum’s price dropped from last month’s high by 27%, losing almost $1,000. The cryptocurrency had been marching steadily higher after finding long-term support around $1,700 in late January, and the subsequent loss of those gains now has technicals on the Liquid Network gateway suggesting “a visit towards $2,200 should not be ruled out.” After a decade since its last deposit, a 1500-strong Initial Coin Offering (ICO) investor recently made an altcoin whale just increased 3,000 Ether which became headlines after they took out a $120 million stake for Ethereum 2.0s proof-of-stake beginning and added their tokens to the Beacon Chain.
| Metric | Value |
|---|---|
| Asset | ETHEREUM (ETH) |
| Current Price | $2810.21 |
| Weekly Performance | 0.29% |
| Monthly Performance | -26.99% |
| RSI (Relative Strength Index) | 33.5 |
| ADX (Average Directional Index) | 42.6 |
| MACD (MACD Level) | -160.93 |
| CCI (Commodity Channel Index, 20-period) | -78.28 |
Momentum Exhaustion Complete – RSI Hits Lowest Level Since August Crash
The Relative Strength Index (RSI) currently stands at 33.51 on the daily chart, the first truly oversold reading since August’s liquidity crisis threw ETH down to sub-$2,200 levels. What’s noteworthy is that momentum eroded steadily over the course of December – the RSI printed a reading of 65 during the swing high at $3,916 and has been cascading lower since, which solidified real downside pressure as opposed to a washout dump.
Comparable RSI setups in August and May led to relief bounces of 15-20% over a matter of days, but those failed at turning the tide at overhead resistance. So for swing traders, this oversold extreme establishes a favorable bounce setup, but the selloff trend still holds until RSI recoups and maintains the 50 threshold, and that hasn’t occurred since the beginning of November.
ADX at 42.59 Signals Mature Downtrend Nearing Exhaustion Point
The volatility index is the highest it’s been in more than 11 years. This leads several analysts to compare the current markets to 2008. Market volatility also indicates how easily the price can change; a higher number means a greater shift. The reading went above 5% earlier in the week for the largest 30-day percentage of movement since the credit crisis bottomed in early 2009.
Historical patterns show that Ethereum typically has major inflection points when the ADX is above 40. The reading in March came before a 40% rally, with a spike in September marking the local bottom before a 70% surge in October. This means that contrarian traders should be on the lookout for a potential trend reversal. However, the fact that the ICO whale has a large stake indicates that they likely believe the long-term value of the asset is much higher than current levels.
20-Day EMA at $3,061 Becomes Key Resistance After December Breakdown
Price action communicates a clear message via the EMA configuration. ETH exchanges underneath the total moving average stack, with the 10-day EMA at $2,959 serving as immediate resistance. Only $150 to the upside. The 20-day EMA at $3,061 rejected the price of three distinct rally attempts at the end of December before the price eventually collapsed.
A worrying technical development is the compression between the 50-day ($3,185) and 100-day ($3,392) EMAs, which are converging toward a potential death cross formation. The former support zone between $3,061-$3,185 will now turn into a resistance cluster that bulls will have to overcome to change the prevailing sentiment. Even news like Amundi’s tokenization might not have the power to stop bulls if the technicals force the market’s hand.
Resistance Wall Between $3,061-$3,185 Caps Recovery Attempts
Sellers have defended a strong resistance area between the 20-day EMA at $3,061 and the 50-day EMA at $3,185. Price levels seen in December near $3,916 are a far cry, as the bulls would have to make a 39% leap to reach that point. A monthly pivot at $3,176 provides an additional barrier.
Bulls are defending two critical support levels here. The psychological $2,500 level coincides with the August bounce area while the yearly low of $2,435 serves as the proverbial line in the sand. The fact that the ICO whale opted to stake and not sell at those levels indicates that institutional players consider $2,800 to be an accumulation zone.
In this market structure, a spring is being coiled between $2,500 support and $3,061 resistance. Volume patterns have shown accumulation signatures despite the price decline – the $120 million long position is just one visible example of smart money positioning itself for the next major move.
Bulls Need Decisive Close Above $3,061 to Reverse Downtrend
For the trend to change, bulls need a daily close with high volume above the 20-day EMA, currently at $3,061. If this occurs, ETH will face resistance at $3,185 (50-day EMA) and $3,500. There are many long positions that became trapped in December waiting to exit there.
If the bearish scenario takes over and ETH breaks below $2,500 on solid volume, then prepare for the long-anticipated ‘L2 phase’ as the market turns south. Stop runs are likely to be triggered all the way down to $2,435 and will begin cascading towards $2,200 if that level is broken. Re-emergence of dormant whales may be witnessed, with this selling likely to be further fueled if more of them decide to take profits after a decade of hodling.
Based on the oversold Relative Strength Index (RSI), the exhaustion-level Average Directional Index (ADX) reading, and the observable institutional accumulation through the ICO whale’s wallet, the most likely short-term direction would be to the upside. This would lead to a relief rally reaching the $3,061 resistance area, followed by further downside action in order to flush out the remaining bulls and search for ‘true value’.
