Ethereum (ETH), the native cryptocurrency of the Ethereum network, has recently experienced significant market fluctuations, reverting from a remarkable seven-month high of $3,940. This pullback from the overbought territory raises concerns about a potential bearish reversal pattern, hinting at a possible upcoming breakdown in price. Yet, recent on-chain data showcases a noteworthy accumulation trend among ETH buyers, suggesting that investors might be preparing for a counterattack against the prevailing bearish sentiment.
$1.15 Billion Worth of ETH Exits Exchanges in 72 Hours
On July 28, during Asian market hours, Ethereum made a bold attempt to capitalize on the bullish momentum it had built over the weekend. Reaching a peak of $3,940 was largely attributed to robust accumulation by crypto investors, which indicated sustained market demand. A tweet from market analyst Ali Martinez echoes this sentiment, revealing that over 310,000 Ethereum, or approximately $1.15 billion, was withdrawn from crypto exchanges in just 72 hours.
This swift outflow of ETH signals increasing confidence among investors, who appear determined to hold onto their assets despite the recent price rally. Historically, such significant withdrawals from exchanges often precede bullish price movements, suggesting that the price of Ether may be able to sustain itself above crucial support levels.
Ethereum Price Faces Major Correction Amid Double Top Pattern
The excitement surrounding Ethereum has, however, been tempered by a recent sell-off, with the Ethereum price experiencing a 2% decline. This downturn has pushed ETH below the horizontal resistance of $3,860, characterized by a long wick rejection that highlights considerable supply pressure. Such a pullback invalidates the earlier breakout around this critical resistance and indicates the emergence of a double-top pattern.
A double-top pattern, often depicted as an M-shape on charts, is frequently observed at market peaks, emphasizing the pressing supply dynamics. The momentum indicator, the Relative Strength Index (RSI), is currently hovering in the overbought territory above 70%, coupled with a bearish divergence that underscores a pronounced need for a price correction.
Should the selling pressure continue unabated, the price of ETH could potentially drop by another 7.6%, challenging the crucial neckline support at $3,500. A significant breakdown below this level might only exacerbate selling activity, propelling the price downward toward the $3,200 mark.
Despite these concerns, market participants should stay vigilant around the $3,500 support level. The ongoing accumulation trend could empower buyers to maintain this critical support and reestablish the bullish momentum that earlier defined the market.
