Ethereum Market Analysis: Profit-Taking Waves and Market Sentiment Insights
Ethereum, the popular cryptocurrency, has been experiencing some turbulence in the market recently. Two significant waves of profit-taking have cast doubts on the possibility of an upcoming rally, with ETH whales increasing their holdings while retail investors are eager to sell.
Over the weekend, Ethereum faced rejection from the $3360 resistance level, signaling a short-term bearish sentiment. However, the successful implementation of the latest Dencun upgrade has helped L2 solutions achieve lower gas fees, with developers now setting their sights on the next target called Prague.
Despite positive developments, on-chain metrics have shown a lack of faith from market participants. Analysis of the supply distribution revealed that smaller wallets holding 1 to 100k ETH have been selling in recent months, while micro wallets with less than 0.1 Ethereum have been buying in anticipation of a rally post-Bitcoin’s halving.
The behavior of different holder cohorts also provides insights into market sentiment. While the 100k-1 million token holders have remained quiet in recent weeks, the 1 million-10 million cohort showed a sharp uptick in early March before also quieting down. This suggests that larger participants are expecting bullish sentiment in the coming months.
The network realized profit/loss (NRPL) metric has shown a trend of profit-taking activity, with occasional spikes indicating participants’ eagerness to book profits even at the $3k support zone. However, the mean dollar invested age (MDIA) has been trending higher, indicating an accumulation phase and suggesting that long-term investors have more reason to hold on than to sell.
In conclusion, while fear and hope continue to influence the market, the metrics suggest that long-term investors are more inclined to hold onto their Ethereum holdings. Despite the recent retracement, the overall sentiment remains cautiously optimistic for the future of Ethereum.
