Ethereum is not exempt from bearish sentiment across the crypto market. It started October 10 at $2,368 but saw a slight increase that shot it up to $2,400. However, the stay at the peak was short-lived, as it retraced to a low of $2,327.
The latest low signifies another retest of the $2,300 support, and there are looming fears about what may happen after it drops below this critical level.
Will Ethereum Lose $2,300?
Several metrics must be considered while deciding if the asset will drop below the highlighted mark. One is its ecosystem. A whale spent $700,000 in fees to settle a single transaction. While the payment left many in shock, some tokens are considering migrating off the ecosystem due to other factors.
Today, Uniswap announced the introduction of Unichain, a layer-2 blockchain that it believes will help achieve its aim without the limitations of the Ethereum Network. The community accepted this move as UNI surged by over 10%. It remains to be seen if this action will be the first of many for other tokens within the ETH blockchain.
Reduced activity in its ecosystem may negatively impact demand, making prices stagnant or plummet.
The demand for ETH is currently low, and there is low retail buying pressure from the US and Korea. Due to this trend, the Coinbase premium and Korea premium are negative. ETFs are also seeing fewer purchases as outflows near $9 million.
While these on-chain data point to current market trends, they may continue, and ETH may retrace in response. The charts also do not indicate an end to the current price trajectory.
For example, the moving average convergence divergence is on the decline. The two EMAs are heading downhill as the drop continues. Such decline is also present on the accumulation and distribution chart as the bulls struggled to soak up the excess supply during the previous intraday session. The momentum indicator is trending horizontally due to the bull’s inability to cause a surge.
These indicators suggest that there is a high chance the apex altcoin may slip below $2,300.
ETH is Oversold
The on-chain RSI signals a potential surge for Ethereum, showing that it is oversold and suggesting an imminent trend reversal. This comes as exchange reserves dwindle and long-term holders continue to hold their assets. The exchange netflow is also negative, indicating reduced inflows into trading platforms.
The on-chart relative strength index also shows a glimmer of hope, as the bulls are attempting to hold prices above $2,300 while staging buybacks to push prices higher.
In the derivative market, funding has increased despite the recent price drop. Over the past 24 hours, traders lost more than $38 million on the altcoin, with long positions accounting for most of the liquidations.
In the Coming Days
The bulls must defend the $2,300 support or risk further declines. After losing the highlighted barrier, the one-day chart suggests that the altcoin may retest its first pivot support at $2,257. This means that a drop to $2,200 is almost inevitable. It is worth noting that the decline may halt around this price mark, as previous price movements suggest.
If the decline continues, the asset may drop to $2,100. If the downhill movement continues, there are also chances of a slip to sub-$2,000. There is a huge demand concentration around $1,980. Data shows notable amounts of ask orders around this mark.
There is also a small demand concentration at $2,480. Depending on the price mark of rebound, Ethereum will retest and flip $2,500 due to massive ask orders around it. The chart also supports this claim, as the highlighted price mark is the 78% Fib retracement level.
