Multiple ETH signals suggest a relief rally is possible. Instead, it has struggled to maintain bullish momentum, an outcome that could present a risk of capitulation.
Santiment observed sensitivity among ETH holders to the possibility of greater selling pressure.
ETH on-chain data shows that top addresses are protecting ETH under whale selling pressure.
Ethereum [ETH] has started this week with a sharp correction compared to the bullish attempt in the last week of September. However, recent observations may provide some insight into the current demand dynamics and where ETH is headed.
ETH, like most other cryptocurrencies, has been going through a slow phase in the market. Now there are concerns that the bears will regain dominance and lead to capitulation.
A recent Santiment analysis highlighted the impact of these concerns, as ETH holders have experienced some panic selling recently. The analysis suggests that despite the surge in selling pressure, the market is still in a short-term profit-taking mood.
Several other cryptocurrencies have experienced the same, including SUSHI and Shiba Inu. Panic among ETH holders after mid-week extended the cryptocurrency’s decline to 8% from its current weekly high. During the trading session on Thursday, October 5, ETH fell to $1,607.
Santiment analysis also suggests that the decline represents an opportunity for short-term recovery. At press time, ETH is trading at $1,648, up 2.29% over the past 24 hours. This reflects Santiment’s statement that the decline will represent an opportunity for short-term gains.
Based on the price chart above, we see that ETH’s price action is confined between the $1544 support and $1745 resistance levels. The recent turn coupled with a surge in liquidity as shown by the Money Flow Index (MFI). But what do on-chain indicators reveal about the current situation?
Is ETH at risk of capitulation? (Official account: Pepe Soha)
Declining confidence in ETH could be a major reason. The cryptocurrency has traded at a steep discount from its mid-July highs to its most recent lows before mid-September.
Multiple signals suggested the possibility of a relief rally. Instead, it has struggled to sustain bullish momentum, an outcome that could present a risk of capitulation.
According to the chart above, ETH addresses holding at least 1,000 and 10,000 ETH are at three-month lows at press time. Despite these findings, the top ETH addresses have been growing over the past four weeks. This suggests that the largest whales are still buying, thus protecting the cryptocurrency from more downside.
While the top addresses are still buying, capitulation is unlikely. This makes it a very important indicator to keep a close eye on. At the same time, centering on addresses holding at least 1,000 ETH can ultimately allow longs to experience less friction. Such an outcome could keep ETH in its current low range, favoring further recovery.
