Ethereum, the second largest cryptocurrency in the world, has witnessed a 5.7% correction in selling pressure over the past week and is currently trading below the $1,900 level. ETH price has seen multiple rejections at $2,000 levels, but this dull price action could end soon according to on-chain data.

According to on-chain data provider Santiment, the percentage of discussions surrounding Ethereum (ETH) has fallen to a 2023 low, the level last seen in mid-May. While other altcoins like XRP and Chainlink have shown strong moves, ETH is showing dull price action.

But Santiment explains that this is no cause for alarm. It adds: “In fact, we have shown several back tests that many altcoins thrive best when traders are distracted by the other shiny assets at the time. And right now that shiny asset is XRP.”

A possible indicator of an approaching price bottom is when traders start taking more trades at a loss instead of a profit. Currently, on-chain transaction volume shows more profit taking than losses, but the margin is insignificant. If ETH falls further towards the $1,700-$1,800 level, panic selling may occur to balance the buying activity.

Courtesy: Santiment

Ethereum short and long term trading position

When making an informed decision for future price action, it is important to understand the position of the trader from now on.

Currently, addresses that have been active in the last 30 days are earning an average return of -0.35%, which is close to breaking even. On the other hand, long-term traders who have been active for the past 365 days have averaged returns of +14.9%.

Courtesy: Santiment

Another important positive indicator for Ethereum is that a large amount of ETH is still in custody. Santiment explains: “With less than 7% of coins on exchanges, the probability of a huge sell-off remains lower than usual. This should be considered one of the best signs of long-term confidence for the asset that had a somewhat disappointing halving (price-wise) in September 2022.

Bhushan is a FinTech enthusiast and has a good flair for understanding financial markets. His interest in economics and finance draws his attention to the new emerging Blockchain Technology and Cryptocurrency markets. He is constantly in a learning process and keeps himself motivated by sharing his acquired knowledge. In his spare time he reads thriller fiction novels and sometimes explores his culinary skills.

The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication is not responsible for your personal financial loss.

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