Ethereum, the second-largest crypto by market capitalization, has experienced a significant drop in value, plunging 24% over the past month. This downturn, mirroring Bitcoins’s recent drop, has brought Ethereum’s price down to $2,522, starkly contrasting the $3,311 peak observed in early August.
As the market digests this decline, analysts and market participants debate whether a rebound is imminent or further losses are on the horizon.
Price Action and Potential Rebound Scenarios
Ethereum’s price drop has ignited discussions among analysts regarding the likelihood of a
rebound or further decline. One notable perspective comes from Anup Dhungana, a prominent cryptocurrency analyst, who suggests that Ethereum could face further downside if the current trend continues.
Dhungana points to the possibility of a double bottom pattern forming at the $2,200 support level. Typically viewed as a bullish reversal signal, this pattern indicates that Ethereum may find strong support at this price level before potentially rebounding.
However, he warns that this can only happen if Ethereum is able to hold onto the $2,200 support, as breaking it even further will likely lead to more losses. A contrary view comes from ‘The Cryptomist,’ another popular analyst on X.
The Cryptomist, on her part, concurs that there might be a retest of recent lows but says there might be opportunities for an upside spike in prices with the incoming monthly candle. This indicates that Ethereum may experience a relief rise, especially now that the market is towards the tail end of the current trading month.
Adding to the conversation, Bluntz, a crypto commentator on X, suggests that Ethereum is nearing a low point. He notes that the range is about to be reclaimed, with a three-day bullish divergence brewing on the ETH/BTC pair. He also mentions that Finex whales are now selling Bitcoin to purchase Ethereum for the first time in this market cycle, hinting at a potential shift in market sentiment favoring Ethereum.
Mixed Signals from Ethereum’s Fundamentals
Beyond its technical analysis, Ethereum’s core metrics paint a mixed picture. Recent data from Glassnode highlighted fluctuations in Ethereum’s active addresses throughout the past month. On August 14th, after a consolidation phase, active addresses surged to 589,000—a notable spike suggesting a network engagement burst.
Yet, this uptick was short-lived. Since then, the number of active addresses has steadily decreased, now at 435,323. This decline might hint at waning network activity, potentially applying downward pressure on Ethereum’s price due to reduced participant engagement.
Conversely, data from Coinglass reveals a more nuanced landscape regarding Ethereum’s Open Interest, which reflects the total number of derivative contracts yet to be settled. Despite a modest 0.01% rise, bringing the current valuation to $10.55 billion, the Open Interest stability suggests a pause-mode market.
This implies traders are maintaining their positions rather than engaging in high-frequency trading. However, beneath this stability surface, Ethereum’s Open Interest volume has plummeted by over 19.20%, now at $29.84 billion. This significant drop could indicate a shrinking appetite for Ethereum derivatives, raising questions about the asset’s future volatility and direction.
