- The Ethereum price correction is heading for a bearish breakdown from the support trendline of a head and shoulders pattern.
- Ethereum exchange balances have declined to roughly 0.137, matching levels last seen during the network’s early phase in 2016.
- A sharp downtick in Relative strength index(RSI) accentuates the aggressive selling pressure in current price action.
On Wednesday, December 17th, the Ethereum price slipped 4.6% to currently exchange hands at $4.66. The selling pressure emerged amid growing uncertainty surrounding Bank of Japan’s upcoming interest rate decision alongside significant outflow from U.S-based spot ETH ETF. While the market sentiment promotes further correction in price, on-chain indicators highlight strong conviction from investors, which could bolster a base support for price bottom in near future.
ETH Exchange Reserves Drop to 2016 Lows as Holders Shift Assets
On-chain metrics reveal Ethereum holders transferring tokens off trading platforms in huge amounts. The amount of total ETH stored across centralized exchanges has fallen to about 0.137, which is the same level it reached during the network’s early years in 2016. This reduction indicates net transfers into private wallets compared to deposits for quick trades.
Data from major venues shows fewer coins available on the spot markets. Traders apparently prefer to have assets outside the exchanges, reducing the number of assets that are ready for immediate transactions.
On the leading exchange by volume, Binance, the share of ETH in its reserves is close to 0.0325, lower compared with values of recent periods. Withdrawals from this platform have exceeded inflows, reducing the number of tokens in the pool to be sold in spot sales.
Ethereum is currently trading for around $2,960. This level is in the recent trading band, even though there have been continuing shifts in exchange holdings, there are no sharp drops. The lower volume on platforms is consistent with steady pricing as available liquidity is sucked from other uses.
Ethereum Price 2% Away For Key Support Breakdown
Over the past month, the Ethereum price has plunged from $3,450 to current trading price of $2,830, recording a 18% loss. This downswing displayed a fresh lower-high formation in the daily chart, reflecting a sell-the-bounce sentiment intact among market participants.
However, a broader analysis of Ethereum’s price shows this pullback as part of a traditional reversal pattern called head-and-shoulder. The chart setup is characterized by three peaks, i.e., a left shoulder, a head, and a right shoulder, while it is commonly spotted at major market tops, reflecting a bearish shift in market sentiment.
Currently the coin price is less than 2% away from challenging the pattern’s bottom trendline, showcased as a long-coming ascending trendline in the chart below. A bearish breakdown below this support would complete the pattern and accelerate the selling pressure on price. The momentum indicator RSI at 37% further supports the risk of bearish breakdown from sellers.
The post-breakdown fall could push the price another 23.5% down to retest the psychological level of $2000.
On the contrary, if the coin price shows sustainability above the ascending trendline, the buyers must breach $3450 to expect a meaningful rebound.
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