ETH Touches $2.8K: A Classic Bottom as Whales Accumulate

On Wednesday, Ethereum (ETH) dipped to a significant low of $2,870, testing an essential on-chain support level that has previously indicated market bottoms.

According to on-chain analyst MAC_D, this price point signifies a cluster of the ‘realized price’ for both retail investors and large-scale entities, implying that a potential rebound could be on the horizon, even as smaller wallets seem to be liquidating their holdings.

In a recent analysis published on CryptoQuant, MAC_D emphasized that historically, realized price zones like this have often marked pivotal bottom areas. This trend occurs when long-term investors start accumulating, while short-term traders exit their positions.

The market expert pointed out that the recent decline below $2,900 was largely driven by risk-averse sentiment ahead of Nvidia’s earnings report. However, following Nvidia's earnings beat, both U.S. equities and cryptocurrencies experienced a swift recovery.

Interestingly, there is a noticeable divergence in market behavior: while smaller wallets are offloading assets during this downturn, whale wallets that hold over 10,000 ETH are continuing to accumulate as prices decline. According to MAC_D, this transition of supply from impatient traders to larger, more patient players is a typical signal seen during late-stage bottom formations.

In addition to this, liquidation data indicates a decline in forced-selling pressure. MAC_D noted that each new local low is now accompanied by a significantly reduced wave of long liquidations. This suggests that over-leveraged bulls may have already been flushed out of the market.

As the market stands, the increase in short positions implies that even a slight bounce could trigger a squeeze on bearish traders, particularly in a market characterized by a relatively thin order book.

Ethereum's performance in the market has proven challenging. Currently priced around $3,020 according to CoinGecko, the cryptocurrency has seen a modest 1% decline over the last 24 hours. However, it has plummeted nearly 15% over the past week and an alarming 22% over the last month.

Moreover, the asset's estimated leverage ratio (ELR) on Binance recently reached a record high of 0.5617 as ETH's price remained confined within a tight range close to $3,000. Experts at Arab Chain caution that this situation is creating “internal pressure” in the market, making it increasingly susceptible to a sharp movement in either direction.

Market observers are also keeping a close eye on nearby liquidity pockets, which could serve as attractive targets for future price movements. Analyst Crypto Patel noted on November 19 that Ethereum confirmed a “Break of Structure” at $2,940 but also pointed out a price inefficiency area, referred to as a “Fair Value Gap,” between $3,270 and $3,360. They estimated that filling this gap would necessitate a price increase of about 14 to 15% from current levels.

In conclusion, as Ethereum approaches this pivotal $2.8K realized price point, the behavior of both retail and whale investors will be critical in determining the next steps for the cryptocurrency. The market remains volatile, and the potential for a rebound, coupled with the ongoing accumulation by larger investors, could set the stage for an intriguing next chapter in Ethereum's price action.

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