Ethereum ETH price has been on a tear after the recent market crashes. While the pioneer cryptocurrency moves sideways, ETH price has shattered its ceiling and set up new all-time highs. However, this drastic price increase in its market value could lead to a minor pullback.
On the 12-hour ETH/USD chart, Ethereum price shows two crucial technical formations that suggest a bearish outlook, the spinning top candle, and the Momentum Reversal Indicator cycle top signal.
Both these signs are indicative of ETH bullish exhaustion, which often leads to a correction.
A bearish spinning top candlestick chart is a technical formation that contains long wicks and a short body that closes below its opening ETH price. This support pattern is formed at the top of an upswing and forecasts a reversal.
Adding credence to this bearish outlook is the MRI’s cycle top flashed in the form of a red ‘one’ candlestick chart. Such a setup projects that a one-to-four candlestick chart correction could ensue.
The stable support point barrier at $2,546.8 is the first line of defense for this sell-off. A breach of this would allow the bears to target the 50 Simple Moving Average on the 12-hour chart that coincides with another crucial demand support level at $2,312.3.
The horizontal price trend lines at $2,371.2 and $2,253.4 act as a buffer zone, present above and below the said target. Here ETH price bulls could potentially rescue the smart contract token and kick-start an upswing.
An increase in the number of daily active addresses interacting with the Ethereum ETH blockchain is bullish and can be considered as a proxy of investor interest in Ethereum at the current price levels. However, the contrary of it also holds true.
At press time, not only is Ethereum price increasing, but the number of daily addresses has dropped 7.1% from 700,000 to 650,000 since April 21, portraying a bearish divergence and suggesting that a decline in ETH price might follow.
Adding headwind to Ethereum buyers is Santiment’s 30-day MVRV model, which shows that 19.3% of the traders who purchased ETH in the past month are experiencing profits.
A similar bump in MVRV was seen in early April, which eventually led to a price decline as market participants rushed to book profits.
History reveals that an ETH spike in social volume usually occurs at price tops. Therefore, the recent 61% bump in this metric is bearish level from a counter-sentiment perspective and adds credence to the price correction thesis mentioned above.
The only arsenal in the buyers’ corner is the diminishing supply of Ethereum held on exchanges. This value has dropped 16.3 million to 13.7 million since the beginning of 2021. Such a sharp collapse causes a negative supply shock and could potentially increase Ethereum ETH price.
While everything seems to be bearish for the second-largest cryptocurrency in the world, investors should consider the possibility of Ethereum price defying technical and on-chain indications due to the current bull run.
If Ethereum ETH price creates a higher high above the price of $2,810, it will invalidate the bearish scenario and kick-start a bullish one.
In such a case, market participants can expect the pioneer altcoin to surge to a price of $2,842.
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