Is Ethereum price about to go under $3K?

Ether (ETH) is struggling to retain its footing in the market, as its long-term chart confirmed a major bearish signal.

ETH price dives below key trendline

ETH’s daily candle closed under the 200-day moving average (200-DMA), a move that has a history of preceding corrections.

On the contrary, spot Ethereum ETFs posted a net inflow of $26.7 million on Aug 1st, offering a minor glimmer of hope to the ecosystem.

Ethereum fees have plummeted since March

During the first quarter of 2024, Ethereum generated average daily fees of over $10 million, the latest onchain data shows. In March 2024, the average was as high as $15 million daily. However, since Q2, the average annualized fee has dropped to roughly $3.5 million, with July’s total revenue averaging under $3 million.

Weekly active users have been relatively stable over the past six months. Yet, the month-on-month drop in annualized fees for Ethereum is 39%.

This has largely panned out due to the relative decline in total value locked, or TVL, for ETH since May, reflecting a drop in DeFi activity. Over $10 billion in value has been wiped out since June 7, data from DefiLlama shows.

Ether’s price support is at $2,700, but will it hold? 

Data from IntoTheBlock, indicates that roughly 3.69 million addresses hold 1.24 million ETH, around $3,000. This particular price point marks Ether’s immediate and psychological support.

However, it is relatively weak compared to the critical support at $2,700. At this range, 11.11 million addresses hold a whopping 59.07 million ETH, acquired at an average of $2,647.

This level was also successfully tested as support several times in early July. Poseidon, a crypto trader, argues that this range might not hold upon another retest, saying,

“It was a bearish retest indeed. It looks awful in the lower time frame. I don't see any reason why we shouldn't go below $2700. Patience.”

Chart technicals, however, show that ETH has bounced back almost immediately each time it has deviated under $3,000 over the past three months, suggesting strong demand in this area.

As observed in the chart, equal lows are formed around $2,700. Drawing confluence with the above inputs, and another potential bounce at $2,650-$2,700 is certainly possible. 

Thus, it should not come as a big surprise if Ether quickly bounces from under $3,000 once again. The bidding range offers a newer dynamic and change in market structure, but more consolidation at current levels may see ETH price undergo a reversal from its previous equal lows.