Ethereum (ETH) Price Analysis: Bearish Signals Threaten $2,000 Support

Key Takeaways

• Falling user engagement indicates a weakened network effect, potentially limiting ETH’s uptrend.
• 21,460 ETH addresses hold 65 million ETH between $2,213 and $2,584, forming a supply wall.
• The bearish structure remains intact until Ethereum’s price breaks above the upper trendline.
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For most of last week, Ethereum’s (ETH) price traded below $2,000. However, as a new week begins, ETH has risen above the threshold, suggesting the previous decline could be over.

However, that seems like an early call that may not turn out to be true. Several indicators reveal that while Ethereum’s price could display strength, it is unlikely to be for a long period.

Ethereum Flashes Several Bearish Signs

One indicator supporting this bias is the divergence in the Ethereum Price Daily Active Addresses (DAA). The DAA measures the level of user interaction with a cryptocurrency.

When combined with the price, the divergence shows whether user engagement can drive the market value higher. A positive reading of the price DAA divergence indicates rising user participation.

If sustained, it typically helps the price trade higher. In Ethereum’s case, Santiment data shows that the price DAA divergence has dropped to -35.87%.

This reading indicates a drop in the number of transactions involving ETH. Should this decline continue, Ethereum’s price might find it challenging to keep climbing in the short term.

Furthermore, other indicators, like the active addresses by profitability, also seem to agree with this. This profitability metric shows the number of active users holding ETH in losses or profits.

The higher the volume in profits, the stronger the support. On the other hand, the larger the cluster in losses, the stronger the resistance.

According to IntoTheBlock data, the major resistance for ETH lies between $2,213 and $2,584. At this price level, 21,460 addresses hold over 65 million coins.

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Since this volume is higher than those in profits, Ethereum’s price might not find it easy to breach the $2,200 level. If this happens, the supply wall around this region could pull the price back, and a correction toward $1,850 could be waiting.

ETH Price to Lose $2K Again

From a technical standpoint, Ethereum’s price still trades within a falling channel. Based on the daily chart, the cryptocurrency is yet to break above the upper trendline of the bearish pattern.

The Relative Strength Index (RSI) reading has increased during this setup. However, the RSI, which measures momentum, has yet to see its reading breach the neutral line.

If this trend remains the same, ETH’s price might struggle to reach a higher value, and its value might decline to $1,758.

On the flip side, if ETH breaks above the upper trendline of the falling channel, this prediction might not come to pass.

In that case, the value might rise above the 0.236 Fibonacci pullback point and climb toward $2,654.