Despite Ethereum (ETH)’s significant price gains to $2,100 driven by BlackRock’s application for a spot ETH ETF, there are growing concerns about a potential profit-taking decline as the price approaches a critical support line. Market analysts note that investors who initiated long positions during the recent price rally are showing signs of impatience as the bullish momentum for ETH fades. Consequently, a decline below this support line could trigger a significant market sell-off.
Ethereum’s NVT ratio still favors bulls
There has been a significant long liquidation over the past 24 hours after the ETH price failed to maintain its momentum around $2,100. As a result, long position holders liquidated more than $7.2 million worth of positions as the price went against their bullish bets.
However, there is a bullish hope that could prevent a sudden decline as the NVT ratio is still in favor of the bulls. Data from IntoTheBlock shows that the NVT (Network Value to Transaction) ratio has fallen in recent days.
The “NVT ratio” serves as a benchmark that compares Ethereum’s market capitalization to transaction volume. A high NVT ratio indicates that Ethereum’s market value significantly exceeds the coin transaction capacity of the network.
This difference could imply that the altcoin is currently overvalued. Conversely, a low NVT ratio suggests that Ethereum may be undervalued, as it indicates a relatively high transaction volume on the blockchain compared to its market capitalization.
The ratio has fallen from a high of 66.91 to a current low of 47, indicating that as more and more holders engage in ETH transactions, the price of ETH becomes more affordable.
Interestingly, the long/short ratio is currently trading at 0.99. This closely contested scenario reflects an almost even split, with 49.8% of positions long and 50.2% short, indicating a major market war.
What’s next for the ETH price?
Ether recently recovered from the key $2020 level, indicating bulls are trying to establish this level as new support. However, bulls continue to struggle to maintain momentum above $2,100. At the time of writing, ETH price is trading at $2,054, down more than 0.5% from yesterday’s price.
Buyers are preparing for another attempt to break the $2,200 barrier. If successful, ETH price could gain significant momentum and potentially rise towards $2,453. Another boost will send the price towards $3,000, especially since there is no major resistance in that range.
On the other hand, the bears are preparing to strongly defend the USD 2,200 level. A reversal from this point could lead to a period of consolidation for the price, which fluctuates between $2,000 and $2,100. A negative shift in the short-term trend can be caused if the price not only falls below $2,000, but also stays below it. In such a situation, the price could fall towards the 200-day Exponential Moving Average (EMA), currently at $1,860.