Ethereum price has seen some impressive gains over the past week. Now, this may look promising at first glance. However, this outlook couldn’t be further from the truth, as on-chain metrics reveal the possibility of stunting for the cryptocurrency market’s favorite altcoin – ETH.
Problems and Obstacles Stacked Against ETH
Despite rallying around 21% over the past week, Ethereum volume appears to be invisible. A price surge without volume tracking indicates a false run that is waiting to be reversed.
On-chain volume for ETH traded at 12.93 billion, which is well below the 200-day moving average (MA) at 14.2 billion. This decline in volume, resulting in a move below the 200-day MA, has been a persistent trend since March 4th. This seemed to be a sign of a lack of interest from investors. Therefore, the recent advance is likely to unravel at the earliest opportunity.
The 365-day Market Value to Realized Value (MVRV) model is used to assess the average profit/loss of investors who have purchased ETH tokens over the past year. A negative value below 10% indicates that short-term holders are selling at a loss and this is usually where long-term holders tend to accumulate since the risk of selling is relatively low. Therefore, a value below -10% is often referred to as an “opportunity zone”.
At press time, the 365-day MVRV was at -9.3%, revealing that long-term holders have been accumulating for some time. Although the index could reach zero, further ascent seems unlikely given past data.
Therefore, the rise in Ethereum price remains limited and lends credence to the technical outlook.
While both of these metrics indicate the possibility of a lack of momentum for Ethereum’s price, the supply distribution index clearly shows why an uptrend is unlikely for ETH.
The last factor
Over the past three months, the number of whales holding 100,000 to 1,000,000 ETH has increased from 145 to 140. Simply put, five holders unloaded their holdings and left the Ethereum network.
Additionally, the category of whales holding between 1 million and 10 million ETH tokens decreased by two. This means that these long-term investors have also shed their holdings or recorded profits.
These activities of whales or institutional investors reveal that they are not optimistic about the performance of Ethereum prices in the near future. Ergo, this is the technical outlook tailwind for ETH.