Ethereum has witnessed a substantial drop in its daily active address (DAA) count over the past four months, raising fears that the Ether (ETH) token price will continue to decline in the coming weeks.
Ethereum Price Stagnation Scares Investors
Ether’s DAA number fell to 152,000 on Oct. 21, its lowest level since June, according to data provided by Santiment. In other words, the crash showed fewer unique Ethereum addresses interacting with the network.
Interestingly, the drop comes on the heels of Ether’s more than 80% correction from its November 2021 high of around $4,850. This coincidence could mean two things: Ethereum users decided to leave the market and/or paused their interaction with the blockchain network after the market crash.
Santiment analysts they blamed from the drop to “weak hands”, sentimental traders who leave the market during a bearish or stagnant phase, noting:
“Disinterest [está] at the highest since prices [de Ethereum] They’ve stalled.”
In particular, the price of Ether has been trading within the range of $1,200 to $1,400 for more than a month, accompanied by a drop in weekly trading volumes.
Investor disinterest can also be seen in Ethereum-based investment funds. These funds recorded $3.9 million worth of withdrawals in the week ending Oct. 14, according to the latest CoinShares weekly report.
In addition, these outflows have reached USD 368.70 million so far this year.
A 40% drop in the price of ETH is on the cards
Cryptocurrency prices have fallen throughout 2022 with other riskier assets, due to restrictive policies by global central banks to control rising inflation. However, they are at risk of falling further as inflation remains high, prompting further interest rate hikes in the future.
âšï¸ BREAKING:
*MAY 2023 FED FUND FUTURES HIT 5.00% AS TRADERS PRICE IN ANOTHER RATE HIKE
— Investing.com (@Investingcom) October 20, 2022
Ethereum could suffer due to inflation-related macro risks. In other words, the ETH/USD pair could slide below its prevailing uptrend line support, thus triggering a classic continuation setup called an ascending triangle, as illustrated in the following graphic.
The profit target of an ascending triangle pattern is measured after adding to the breakout point the maximum distance between its horizontal trendline resistance and ascending trendline support. As a result, ETH’s downside target is around $750, which is 40% below current price levels.
Conversely, a bounce off the lower trendline could see Ether head towards the upper trendline. In other words, a rally towards $1,800 in October, 40% higher than current prices.
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