The recent price action has raised fears that Ethereum (ETH) price could lose the $1,600 support for the first time in six months. Chain analysis examines vital data trends that suggest bullish traders could capitalize on the market's rising FUD.
After surpassing the $2,000 mark in mid-July, the price of Ethereum (ETH) has entered its second consecutive month of decline. Despite the recent appearance of Grayscale Spot ETF Following the appeal victory, the prevailing sentiment in the cryptocurrency markets has been predominantly bearish. in chain The analysis examines how strategic cryptocurrency traders could flip the script by capitalizing on the market's extreme fear, uncertainty and doubt (FUD).
Crypto Investor Sentiment Nears Extreme FUD Levels
After nearly two months of decline, most cryptocurrency investors are now expressing bearish sentiment. According to Santiment, a crypto data analysis company, bearish stances dominated crypto market discourse in September.
But interestingly, historical trends suggest this is a telltale sign that the market is approaching an inflection point.
The social volume chart below illustrates that mentions of "bear market" have surpassed "bull market" on every trading day since August 31.
Social volume Measures the number of times a crypto topic is mentioned on relevant social media channels. In this context, mentions that a “bear market” will dominate social media commentary for an extended period indicate that investors are dysphoric.
Read more: What is FUD? Exploring fear, uncertainty and doubt
Typically, as market sentiment approaches extreme fear, strategic investors often interpret this as the perfect time to buy the dip, inadvertently triggering a price rally.
Historical trends show that this phenomenon occurred around March 8, when the USDC unpegging and Silicon Valley Bank bankruptcy triggered extreme FUD in the market. In response, the price of Ethereum skyrocketed 48% from $1,430 to $2,120 between March 11 and April 17.
The recent extreme level of negative opinions is a vital indicator that this phenomenon could reappear in the coming days.
Strategic traders have already placed purchase orders worth $584 million
Bullish traders have already placed buy orders behind the senses in hopes of a positive momentum shift.
Aggregate order books from 21 crypto exchanges currently show that bullish traders have placed active orders to purchase 643,000 ETH for around $584 million. This is almost 50% higher than the existing sell orders of 431,000 ETH.
He Chain Exchange Market Depth The chart shows the volume of active orders that Ethereum traders have placed on major crypto exchanges.
Read more: Order Book: What is it and how to use it in cryptocurrency trading?
The chart above shows that, despite the prevailing bearish sentiment, the current market demand for ETH exceeds supply by 211,500 coins.
This means that within the current market dynamics, Ethereum has formidable support in the territory between $1,500 and $1,600. But it is also a vital sign that strategic traders are taking action to capitalize on the prevailing bearish sentiment.
ETH Price Prediction: Consolidation Around $1,600 Before Breakout
From an on-chain perspective, current spot market demand levels mean that Ethereum price will likely make significant gains if momentum turns bullish. However, the bulls will face significant difficulties in reclaiming the $1,800 territory.
The money in/out data around the price, which describes the distribution of the purchase price of current Ethereum holders, vividly illustrates this.
It highlights that 3 million investors had purchased 5.04 million ETH coins at the maximum price of $1,805. Without a significant change in market sentiment, they could sell off early and cause another Ethereum price drop.
But if the bulls can overcome that resistance level, Ethereum price could avoid making another attempt at the $2,000 range.
Read more: A deeper look at the Ethereum network
But in the unlikely event that the market FUD intensifies, the bears could force a major decline towards $1,400. However, 2.69 million addresses had purchased 4.1 million ETH at the minimum price of $1,585. And if they go for HODL, Ethereum price could rebound again.
But if that support level gives way, the price of ETH could begin to approach $1,400.
Disclaimer
In accordance with Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to providing accurate and unbiased reporting, but market conditions are subject to change without notice. Always do your own research and consult with a professional before making any financial decisions.
