Ethereum Falls Below $3,500 on Second Day
Ethereum (ETH) price dropped for the second day in a row on Tuesday. It traded below $3,500 amid broad losses in the cryptocurrency market. The largest smart contracts token failed to recover to $3,700 on Monday. This was due to profit-taking, cautious investor sentiment, and ongoing macroeconomic worries.
Institutional demand for Ethereum ETFs is also weak. All nine US-listed Ethereum ETFs had zero inflows on Monday. This shows investors remain cautious in the current market.
Ethereum Supply on Exchanges Keeps Dropping
The amount of Ethereum held on Binance, the top crypto exchange by volume, has fallen since June and July. Data from CryptoQuant shows the ETH supply ratio on exchanges is at 0.0327, the lowest since May.
- Lower Ethereum supply on exchanges usually means more coins are moved to private wallets.
- Such moves are seen as bullish for the medium to long term.
- Less supply on exchanges can reduce selling pressure on the market.
If this trend continues, it could cause a shortage of Ethereum available to buy. This may push prices higher if retail investors become more confident. However, prices might stay volatile or fall in the short term. Investors should watch carefully during this period.
Retail demand has not improved since the October 10 event that liquidated over $19 billion in crypto assets in one day. Ethereum futures Open Interest (OI) is at $41 billion, down from $46 billion on November 1. A steady rise in OI is needed to support price gains soon.
Technical Analysis: Ethereum Faces Downside Pressure
Ethereum trades below $3,500 and key moving averages. The 200-day EMA is at $3,594, the 100-day EMA at $3,878, and the 50-day EMA at $3,888 on the daily chart. The recent rally to about $3,656 on Monday did not hold, as investors took profits.
The Relative Strength Index (RSI) stands at 41, near oversold levels. This suggests bearish momentum may continue. Ethereum could fall toward the next support level near $3,350, last tested on Sunday.
On the other hand, the MACD indicator is close to giving a buy signal. If the blue MACD line crosses above the red line and rises, this could attract buyers. A positive MACD signal might help push Ethereum above the 200-day EMA at $3,695.
