What does this development indicate for Ethereum, going forward

Ethereum has been following Bitcoin’s lead along with the entire crypto market as it rallied this month. Trading at $3914.85, the altcoin is in a good spot and the same can be observed from investors’ perspective as well. But this development could put a halt to the good mood prevailing in the market. 

Ethereum on a roll

After a 30.40% rally this month, ETH managed to make things easier for its investors. At the time of writing the number of addresses in loss fell to a 1 month low of merely 2.17 million, which represents only 1% of all Ethereum investors.

ETH addresses in loss | Source: Glassnode

In fact, investors probably even took advantage of Ethereum’s rally towards $4k and maybe sold their holdings. And these sellers weren’t regular traders either. Mid-term holders, who held ETH for 3 – 6 months, and long-term holders who held their balance for at least 2 – 3 years, sold off a majority of their holdings this month.

ETH supply last active 2 years to 3 years | Source: Glassnode

Mid-term holders’ supply reached a 6 month low and long-term holders’ supply fell to a 7-month low.

Surprisingly a chunk of ETH was actually picked up by whales or rich cohorts from exchanges as addresses holding more than 10k ETH rose in 48 hours. Even at just 10,000 ETH in every address, at least $4.2 billion worth of ETH was bought.

Ethereum’s address with 10K ETH balance | Source: Glassnode – AMBCrypto

But the selling by MTH and LTH was not some random selling for profit incident. There is a strong possibility that these investors are preparing for soon to arrive price fall.

A price fall?

Indeed. The very first indication of the same comes from the market top created today as supply in profit reached 98.62%. A market top usually is followed by some price fall. In the past too (September 15), when a market top was formed, price fall followed and the same was hinted back then.

Ethereum’s supply in profit | Source: Glassnode – AMBCrypto

So it wouldn’t be a surprise if the same happens again. And on top of that Relative Strength Index’s current position supports the same argument. We can see that RSI is close to breaching the overbought zone for the first time this month.

But we must observe whether the RSI cooldown is accompanied by a price dip or simple consolidation.

Ethereum price action and RSI | Source: TradingView – AMBCrypto

In any case, taking precautions is always better than regretting.