After outperforming Bitcoin and most assets in November, Ethereum seems to have taken the southbound road. The top altcoin even after the recent selloffs maintained above the crucial $3955 level. However, it lost over 10% in the last four days as Ethereum traded at $3,780.60 at the time of writing.
While the larger market didn’t anticipate Ethereum’s fall under the $3800 level after the alt’s price rose 7.5% in November to $4,631, reaching a market capitalization of $549 billion at the end of the month. So, could this be ETH’s fall from grace or just a dip-buying opportunity?
Over the last month, 50-day and 200-day moving averages closed the month 19.7% and 7.4% higher than the previous month, at $4,268 and $3,153 respectively. While average daily USD volumes totaled $1.39 billion, up 11.5% compared to the month prior. Defi’s growth over the last month also helped ETH’s trajectory as Total Value Locked (TVL) in the Ethereum Network grew 8.68% in November to $78 billion.
Further, average daily active addresses on the Ethereum network grew 5.30% in November to 624K, while new addresses also grew 10.8% to 139K, presenting a healthy growth in on-chain participation. Data highlighted how Ethereum was deflationary for 8 days in November, as the network burnt a daily average of 12.1K ETH throughout the month, noting 23.5% monthly growth.
If the network growth continues at a similar pace with new and existing participants flocking, the price could pull from the lower levels spoon enough.
However, with whale addresses depositing ETH to exchanges the current situation tilts towards the bearish side. Data from whale alert highlighted that 29,300 ETH (worth $112,127,387) was transferred from an unknown wallet to FTX as ETH’s price oscillated around the $3700 mark.
But, a reversal could be in play
Data from Sanbase highlights how the macro-bullish trend remains intact as the 10 largest Ethereum addresses on exchanges hold a cumulative 3.82 million $ETH, which is the lowest level since the exodus. Meanwhile, the top 10 largest non-exchange addresses hold a cumulative 24.78 $ETH, closing in on the 26.63 $ETH seen at the ATH level in June 2016, supporting the long-term bullish argument.
Further, it could be seen that active addresses for ETH had maintained well while active deposits saw a downfall. If active addresses pick up and the downtrend in active deposit continues a recovery could be expected sooner.
Notably, during the April price run, ETH’s active addresses spiked while active deposits fell, giving prices a push above the $2K level.
Thus, while Ethereum being near $3700 could be a good dip-buying time, as it has acted as long-term support, it’ll be best to wait for on-chain activity to pick up. A spike in daily RSI, which has been in a downtrend, could also act as a good indicator for trade entry. In the short term, while volatility is expected from the asset, ETH could make a come back soon enough.