Ethereum Price Likely to Reversal: What On-Chain Indicators Show
Ethereum is attracting attention again as it rallied to the level of $195 in just the past 24 hours. This growth move has seen 220,000 addresses holding relatively low Ether disappear, according to IntoTheBlock’s “Daily Active Addresses” model.
The overwhelming selling pressure has caused the cryptocurrency evaporation rate of old wallets to nearly exceed the rate of new addresses being created in the network, which may affect the Smart Contract system.
The Ether Network Is Losing Growth
Network growth is one of the most accurate price forecasts, according to Brian Quinlivan, Director of Markets and Social Networks at Santiment. Quinlivan believes that network growth often leads to price increases. Conversely, a decrease in the number of new addresses created will cause a certain price drop in the future.
The shrinking state of the Ethereum network can predict a price reversal in the near future. The increased selling pressure at this point should reinforce the backdrop of an upcoming bull market.
If Ethereum value breaks below the support of the 100-day moving average, the price will most likely return to the 200-day moving average. This support margin is currently at $172.
IntoTheBlock's In/Out of the Money Around Price (IOMAP) model shows that, regardless of the contraction of network growth, prices fall below the 100-day moving average. not easy. From this model, it can be estimated that about 1.5 million addresses bought 5 million ETH at an average price of $185.
This supply can help Ether escape other price reversals as well as become a buy zone for side traders.
There is still hope
Considering the possibility of the 100-day moving average being hard to hit, IOMAP forecasts that Ether could rally towards $200. Currently, there is no support zone between $185 and $200 to definitely take the price to this level.
However, for the 1-hour timeframe, it can be seen that the middle of the Bollinger band is the untradable space. Once the price breaks out of this zone, Ethereum's next moves will become clearer.
A move below the Bollinger band at $186 would break the 100-day moving average, triggering a dramatic price reversal as mentioned earlier. Conversely, if it breaks out of the resistance area at $190, Ether price can be taken to $200.
Also to reiterate, the IOMAP model indicates that 1.2 million addresses bought nearly 7.8 million ETH at around $200. As such, these price barriers could prevent Ether's gains.
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