Ethereum Price Trends: On Chain Metric Analysis of the Most Popular Altcoin

Ethereum, the altcoin king of the crypto market has been struggling for quite some time now, in line with the broader market bearishness. However it wasn’t always so. During the month of November 2021, Ethereum’s native token ETH clinched new all-time-highs, which were just shy of the psychological $5000 (~INR 3.95 lakh) mark. Unfortunately, that didn’t last long.

ETHEREUM (ETH): TECHNICAL OVERVIEW

Source: Tradingview

Ever since the all-time-highs, Ethereum has been on a strong downward trend. Falling from near $5000 level to currently barely managing to stay above $1000 – it has come a long way. From a technical standpoint, as demarcated by the orange trend lines, prices have formed a descending wedge. Typically a breakout over the upper trend line resistance of the wedge triggers some positive price action.

However a full fledged recovery might be hard, thanks to stiff resistance prices may face from the 50-day and the 200-day moving average (marked in blue and purple respectively). To add to that, the region marked in grey will also serve as a supply zone. That area has been historically been a region of demand. But in the first week of May when the $2500 mark was flipped, it would serve as a region of strict resistance.

And, with the Relative Strength Index trading around 35 as of writing this, an immediate upside may be difficult.

Additional Read: Ethereum Price Prediction 2022, 2023 & 2024

ETHEREUM’S PRICE CRASH: HAS A RECOVERY BEGUN?

Well, not yet.

Investors who have been holding on to their ETH tokens have been selling at a loss for quite some time now. Especially with the crypto winter setting in – every high will be sold and every dip will be bought into to reduce average prices. An on-chain metric, popularly known as SOPR, or the Spent Output Profit Ratio has been below 1 for a major chunk of 2022. Take a look.

Spent Output Profit Ratio | Source: Glassnode

If you check the blue line on the above chart, it clearly depicts how the ratio has been below 1. The SOPR is a very simple indicator. It is calculated from something called ‘spent outputs‘. It is the realised value divided by the value at creation of the output. Or simply, price sold / price paid.

When SOPR > 1, it means that the owners of the spent outputs are in profit at the time of the transaction; otherwise, they are at a loss. In a bear market, everyone is selling or waiting for the break-even point to sell. When SOPR is close/greater than 1, people start to sell even more, as they reach break-even. Thus, with a higher supply, the price plunges.

Six months into 2022, check out how Bitcoin Price has been holding on so far.

ETHEREUM’S DEFI PROTOCOLS TO THE RESCUE?

Ethereum’s smart contract capabilities has been one of the largest and the most utilised smart chain in all of crypto. And despite the market crash – it has still managed to hold on to that crown. However, it must be noted that the TVL or the Total-Value-Locked has fallen to less than a third of what it was at the beginning of this year.

Ethereum TVL | Source: DefiLlama

Additional Read: Take a Deep dive into How Ethereum works?

ETHEREUM’S (ETH) LAST HOPE GIVING WAY

Even Ethereum’s users have been slowing down their activity on the chain too amid the price crash. According to data from Etherscan.io, Active Addresses on the Ethereum blockchain has also shrunk by almost 20% from over 500k to now barely holding on just above 400k.

Daily Active Addresses | Source: Etherscan.io

CONCLUSION

All things considered, the crypto market winter has hit Ethereum (ETH) very hard. From technicals to fundamentals, all these indications have turned extremely unfavourable for bullish bets. However, that being said, it can also be agreed that the particular coin is in an extremely oversold situation and a recovery, backed by good news and an improvement in market sentiments, can be significant hereon.

HOW TO INVEST IN Ethereum(ETH)

Ethereum (ETH) can be easily bought here on CoinDCX along with the best deals in the market. Just download the CoinDCX App crypto app, enter the details required and wait for your profile to get verified. Once done, fund your wallet and buy Ethereum.