Over the past two weeks, the cryptocurrency market in general has shown poor performance, causing the price of Ethereum to fluctuate within a narrow trading range.
Since July 21, this altcoin has tested the resistance level around $3,859 multiple times while finding support at $3,524, and is struggling to overcome this area. With a gradual decline, key on-chain indicators currently suggest that ETH may face an extended sideways consolidation phase or potentially a price drop.
Ethereum's Major Players Have Withdrawn
According to data from CryptoQuant, the estimated leverage ratio (ELR) of ETH across all cryptocurrency exchanges is decreasing, reflecting a decline in investor confidence and risk appetite among futures traders. According to the data provider, the ELR of ETH is currently at its lowest level of the week at 0.76.
The ELR index measures the average leverage that traders use to trade an asset on cryptocurrency exchanges. This index is calculated by dividing the number of open contracts of the asset by the exchange's reserves for that currency.
The decreasing ELR index of ETH signals a market environment where traders are avoiding high-leverage trades. Investors are becoming increasingly cautious about the short-term outlook of this coin and not holding high-leverage positions, which could increase the risk of losses.
If this speculative activity continues to decline, the likelihood of a breakthrough in the short term will decrease, and the chances of ETH continuing to fluctuate within a range will increase.
Furthermore, ETH 'whales' have also reduced their accumulation over the past week, possibly to take profits. According to data from IntoTheBlock, the net cash flow of large ETH holders has decreased by 224% in the past seven days, indicating a retreat from key ETH holders.
Large holders are whale addresses that control more than 0.1% of the circulating supply of an asset. Their net cash flow tracks the difference between the amount of coins they buy and the amount they sell over a specific period.
When the net cash flow of large asset holders increases, whales will buy more coins/tokens of that asset on exchanges, likely in anticipation of a price increase.
On the other hand, similar to ETH, when the price drops, it signals reduced activity and profit-taking among these key investors.
ETH Bulls and Bears Face Off: Will the $3,524 Level Hold or Break?
The above metrics suggest that confidence in the short-term bullish momentum of ETH is weakening and the reluctance of major holders to inject significant capital into the market right now. If this continues, the downward pressure on this coin will increase, potentially causing a breakdown below the support level of $3,524.
If this happens, the price of ETH may continue to fall to $3,067. However, if the buyers regain an advantage, they may surpass the resistance level of $3,859. If successful, the price of ETH could rise above $4,000.
