Ethereum Struggles with Resistance Despite Recent Gains

In the last 24 hours, Ethereum has seen a slight increase of approximately 1%, maintaining its position near the $2,000 mark. However, this is not the first instance of Ethereum attempting to spark a recovery. Over the past ten days, the cryptocurrency has made three notable attempts to bounce back, each showing promising initial movements but ultimately failing to sustain momentum.

The reasons behind these unsuccessful rebounds can be gleaned from recent chart analyses. Insights suggest that for Ethereum to witness a genuine optimistic trend, several factors must align.

TRUSTED PARTNER

5.0 ★★★★★

Review and Opinions →

🔥 Bonus 2.400 $

Bonus Instant + 150 FS 🏆

Open an account

Resistance Levels Challenge Ethereum’s Recovery

A pattern known as an ascending triangle has been developing since early February, indicating increasing buying activity. In this formation, buyers gradually lift the price, but sellers are consistently pushing back at specific resistance levels.

This upward trend has revealed that buyers have been stepping in during dips, but pivotal resistance areas just above $2,000 and at $2,120 have thwarted each recovery effort.

Three distinct rebound attempts occurred: On February 6, the price surged by 23%, only to falter near $2,120. Following this, on February 12, the price climbed 11% but again faced obstacles below resistance. The most recent attempt on February 15 saw a 7% rise, but it too was unable to maintain its position above $2,000. Despite renewed buying activity, breaking through these resistance levels proved elusive.

A significant indicator highlighting this struggle is the Chaikin Money Flow (CMF), a gauge that analyzes large-scale investor transactions by considering both price and volume. When the CMF rises above zero, it indicates a preference for buying over selling.

On February 15, during the latest rebound attempt, Ethereum’s CMF crossed the zero mark and now rests just above at around 0.05. This indicates that significant investors appear to be entering the market again, albeit with limited strength.

This leads to an essential inquiry: Why is Ethereum struggling to capitalize on the return of buyers? The answer lies in the behavior of large investors and long-term holders.

Increased Selling Pressure from Major Investors

Throughout the same period when Ethereum attempted its recoveries, large holders, or whales, have been reducing their stakes in the asset. Data reveals that these wallets decreased their Ethereum holdings from 113.92 million ETH to 113.66 million ETH, translating to a reduction of approximately 260,000 ETH, valued at around $500 million.

This trend illustrates that rather than bolstering prices during recovery attempts, whale selling has contributed to the ongoing struggles.

Another pertinent metric, the Hodler Net Position Change, tracks whether long-term investors are accumulating more assets or offloading them. A negative reading indicates that long-term holders are selling. Between February 3 and February 16, the metric remained in negative territory. Meanwhile, selling pressure escalated from -13,677 ETH to -18,411 ETH, indicating a 34% rise in sales.

Each recovery attempt coincided with this heightened level of selling.

TRUSTED PARTNER

3.9 ★★★☆☆

Review and Opinions →

🔥 Bonus 1.400 $

Bonus Instant + 225 FS 🏆

Open an account

This dynamic clarifies why Ethereum has struggled to maintain upward movement. While new buyers have entered the scene, long-term holders and whales are stepping back. Another complication arises from the resistance at the $2,000 and $2,120 thresholds.

Investor Cost Basis Contributes to Resistance

Investor cost basis data reveals where many hold their assets, often resulting in resistance levels when prices approach these zones.

The most significant cluster of cost basis currently exists between $1,995 and $2,015, where over 1.01 million ETH were initially purchased. This creates a hefty selling barrier.

When the price nears this range, many investors opt to sell in order to recoup their initial investments, thereby increasing supply and hindering further price increases. This pattern aligns with all three failed rebound efforts.

Each time the price attempted to rise, it encountered hurdles close to this cost basis zone. It’s evident that Ethereum must decisively break through this area to initiate a sustained recovery. Currently, the price remains caught between support and resistance levels.

Immediate resistance is evident at $2,000, which remains crucial, while $2,120 continues to be a critical barrier. Should Ethereum succeed in breaking the $2,120-$2,140 range, potential upside targets might reach as high as $2,210 and $2,300.

However, if resistance isn’t overcome, the Ethereum price could continue to trade sideways, with support levels holding firm around $1,895. A dip below this point would invalidate the recent trendline-led recovery attempts. Charts indicate that buyer activity is indeed returning, as suggested by the CMF, yet persistent selling from whales, long-term holders, and enduring resistance from cost basis levels hampers the potential rally.

Ultimately, Ethereum’s future price trajectory hinges on whether buyers can effectively absorb this selling pressure and breach the existing resistance levels.