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Amid a general market decline, the world’s second-largest cryptocurrency, Ethereum (ETH), has entered a major correction. After falling last week, the price of ETH is fluctuating around the $2,000 level.
Onchain data provider Santiment gives us some insight into what could be the next price move for Ethereum (ETH). The data provider noted that strong short positions at the $2000 level are building up on the 8-hour chart for Ethereum.
Provided by: Santiment
However, Santiment adds that this usually doesn’t end well with shorter ones, and a short squeeze is likely to follow. Thus, we may see a rebound in Ethereum’s price.
But another important factor is the ETH exchange offer. Santiment notes :
While we’ve seen a significant drop in supply on the exchanges over the last year or so, on May 1, 2022, there was a huge increase in supply on the exchanges as people rushed to close their positions, which clearly reflected in the price itself.
Thus, any further increase in exchange supply would cause an additional drop. This suggests that investors are in a state of panic and have completely given up. Although the situation looks frightening, it may be a good moment to create new positions.
Provided by: Santiment
Some positive indicators for Ethereum
Santiment cites a 90-day MVRV (market value to realized value) ratio for Ethereum. He adds that MVRV “measures medium-term holder gains/losses, showing that we are almost in the Opportunity Zone, which has historically seen a local bottom with a decent R/R ratio.”
On the other hand, global macroeconomic indicators will continue to play a large role in determining cryptocurrency market dynamics. Against the backdrop of persistent inflation, the U.S. stock market and the S&P 500 are showing signs of weakness amid fears of aggressive interest rate hikes by the Federal Reserve. At the same time, there are great fears that the U.S. will fall into recession.
#supply #ETH #exchange #growing
