Ethereum price extended the down leg below the previous support at $1,600 – a move that saw declines sweep through levels seen last in March. The leading smart contracts token traded new weekly lows of $1,540 before launching an ongoing rebound seeking to reclaim the ground above $1,600.
Dormant ETH Finally On The Move
The sell-off on Monday also coincided with a spike in the movement of previously dormant tokens away from old wallets. According to the Age Consumed on-chain metric by Santiment, there was a noticeable increase in the most dormant ETH over three months.
“A continued dip in mean $ age while prices drop is a capitulation sign, which foreshadows reversals.”
Ethereum Age Consumed Metric | Santiment
The rollback to March price levels could attract more long traders, who by taking advantage of the dips, are targeting short-term profits as ETH price rebounds to close the gap to $2,000. This uptake of Ethereum means fresh momentum is brewing for the next rally, first above $1,600 then to $1,800, and later to $2,000.
A sustained break past $2,000 could signal the start of a much-awaited bull market in 2024 going into 2025.
This current bullish outlook cannot be depended on until ETH price clocks highs above the lower ascending trendline or closes the day beyond the pivotal $1,600 level.
ETH/USD daily chart | Tradingview
Upholding support at $1,600 could help ease the potential selling pressure likely to follow the confirmation of a death cross pattern. This bearish chart formation occurs with a short-term moving average such as the 50-day EMA (red) crosses below a long-term one like the 200-day EMA (purple).
The death cross adds credence to the bearish outlook, implying that sellers have the upper hand and the ongoing downtrend is far from over.
Unless investors put the fear of uncertainty aside and rally behind Ethereum, the Money Flow Index (MFI) will drop into the oversold region, which will validate another sell-off to $1,450.
Will ETH Price Drop To $1,000 Before The Bull Market?
Analysts at Matrixport in their latest report on the performance of altcoins, said that “with Ether being close to the psychologically important $1,600 level, a break could carry prices lower, especially as revenue growth disappoints.”
The longer the price stays below the $1,600 level, the higher will increase the chances of another sell-off trimming gains and forcing investors to capitulate. Matrixport believes it is too early to rule out a potential drop to $1,000 – “a level that would appear justified based on the revenue projection from the Ethereum ecosystem.”
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