Ethereum has posted an impressive 43% year-to-date performance. But lately, there have been mixed signals surrounding the pioneering smart contract network.
Ethereum became deflationary after the completion of The Merge and the implementation of the Ethereum Improvement Proposal 1559. This EIP allowed a mechanism for gas fees to burn on the network and caused ETH supply to become deflationary in December 2022. However, ETH price is essentially at the same level as The Merge.
Looking at some on-chain data can help us see how Ethereum whales are positioning for the coming weeks.
Ethereum price flat after network upgrade announcement
Ethereum (ETH) is currently up 36% since the beginning of 2023. But other competing layer 1 altcoins like Cardano (ADA), Polygon (MATIC) and Solana (SOL) have all outperformed them with 57%, 62%. and 132% YTD growth, respectively.
Ethereum price and whale transaction charts February 2023 | Source: Santiment
ETH remained flat around the $1,600 level following the announcement of the Zhejiang testnet on Jan. 31, which would allow testing of staking withdrawal functionality. Interest in whales also waned during the same period.
On-chain data from Santiment shows large transactions between $100,000 and $1 million have steadily declined since mid-January.
Ethereum network activity is fluctuating but support levels are holding
At the beginning of February, activity on the Ethereum network has declined. From a YTD high of 1.18 million, 24-hour transaction volume on Ethereum fell well below 800,000 in February, Santiment data showed.
Despite the ongoing decline in transaction numbers, Ethereum has successfully held its $1,400 support.
In/Out of the Money (IOMAP) data from IntoTheBlock shows that ETH is more likely to crack the $1,700 resistance than drop its $1,400 support.
IntoTheBlock estimates IOMAP data by comparing purchase prices of ETH held in wallets to current prices.
According to the latest IOMAP analysis, ETH has remained above $1,400 despite increasing whale selling pressure as fewer holders are likely to break even at the resistance level. Many network participants who are “in the money” are currently absorbing the selling pressure.
Futures market positions betting on a dip
In futures markets, traders are betting on the future performance of an underlying asset. ETH futures market trends and prices are key indicators for estimating the likelihood of a rally.
For now, long/short positions are showing cautionary signs as more investors bet on ETH’s price falling in the coming weeks.
Since peaking at 1.13 in 2023, the ETH long/short ratio has fallen below 0.96 on Feb. 5.
Coinglass calculates the long/short ratio by comparing the volume of long and short positions held by ETH derivatives traders in the futures markets. The declining long/short ratio shows that investors are predicting an impending price decline.
In particular, Santiment’s weighted sentiment data shows that social perceptions of Ethereum are largely negative.
But all that could change quickly if the Zhejiang testnet withdrawals are successful without major technical concerns. The Zhejiang testnet is scheduled to launch on February 7 ahead of the Shanghai upgrade later in March.
Disclaimer
BeInCrypto strives to provide accurate and up-to-date information, but accepts no responsibility for missing facts or inaccurate information. You agree and understand that you should use this information at your own risk. Cryptocurrencies are highly volatile financial assets, so do your research and make your own financial decisions.
Comments are closed.