Ethereum (ETH) price drops 6%, raising questions about its next move

While the weekend started with a 4% dip, whale activity and derivatives data suggest ETH could still recover.

Ethereum (ETH) price is trading in a small range after a 6% drop over three days sparked questions about its next move. While the weekend started with a 4% dip in crypto prices, whale activity and derivatives data suggest that ETH could still recover.

What Happened: According to data from CryptoBusy, in the last 30 days, over 1 million ETH has been withdrawn from exchanges, marking a 5.5% drop in supply. Exchange balances now stand at 17 million ETH, which is the lowest level since 2021.

As Ethereum moved up from $1,800 to over $2,600, there was an increase of more than 44%. This pattern has most often led to bullish momentum, as cryptocurrencies rise in value after their supply is reduced. A drop in supply and an increase in demand often lead to higher prices in the market.

These large holders, or whales, are choosing to move their ETH to cold storage instead of keeping it on exchanges. As a result, stock prices may stop dropping and often show traders’ confidence in the upward trend. Traders are closely monitoring the market to see if it will surge above the $2,500 point.

TD Sequential Signal: This means that Ethereum has been making new lows and new highs on the 3-day chart. After exceeding the 0.618 and 0.786 levels of the Fibonacci retracement, it sits just beneath the resistance at $2,500. However, following the TD Sequential indicator, there is a sell signal of “9” displayed on that same chart.

This pattern often suggests short-term profit-taking. Ethereum dipped to $2,457 after failing to hold above $2,500. Despite this, it remains above the 0.786 Fibonacci level at $2,403. If price stays above $2,400 and breaks past $2,500 again, analysts expect a push toward $2,738 and possibly $3,104.

Indicators like the Relative Strength Index (RSI) have cooled from overbought conditions, dropping from 70.85 to 66.78. The Moving Average Convergence Divergence (MACD) still shows bullish momentum, though the histogram is contracting.

Related: Is Ethereum A Good Investment In 2023?

What You Should Know: Data from Coinglass shows that Binance’s top traders remain bullish on Ethereum, with a long/short ratio of 3.04 by account and 2.66 by position. This means over 75% of leading traders expect price growth.

Despite a 12.78% drop in ETH derivatives volume to $72.27 billion, open interest stayed stable at $30.84 billion. Options volume decreased, yet options open interest rose slightly to $7.25 billion, suggesting ongoing long-term positioning.

Liquidation data reveals $93.14 million was liquidated in the past 24 hours, including $81 million from long positions and only $12 million from shorts. This indicates that prices did not decrease a lot owing to recent sell-offs. Over the last two weeks, ETH has incrementally gone up by 35%.

Market volatility has often seen $1,986 and $2,196 as reliable support for the Fibonacci retracement levels. Ethereum price holding above these zones suggests the trend remains intact. As a new week begins, whale activity and derivatives data may help Ethereum retest and possibly reclaim the $2,600 level if momentum builds.