Ethereum Price Analysis: ETH Bogged Down By Heavy Resistance

Last Updated July 23rd 2021
3 Min Read

Daily Ethereum ETH Price Forecast
  • The number of addresses entering Ethereum has been steadily decreasing. 
  • MACD for the daily chart has reversed from bullish to bearish.

Ethereum seems to be in a bit of a pickle. As things stand, the price is hovering between strong resistance and support levels ($650 and $615). While ETH is trending in a narrow $35-range, what does it mean for its future price action? Let’s take a look.


Ethereum Market Momentum Reverses From Bullish To Bearish

After getting rejected at the $650 psychological level, the price has dropped below the 20-day SMA. Flipping this key level from support to resistance triggered the MACD to reverse from green to red.

eth/usd  daily chart 122320

Image: ETH/USD daily chart

Even if the buyers take back control, they face an unbelievably strong resistance barrier at $650. Previously at this level, 583,000 addresses had purchased 7.65 million Ethereum tokens. However, if the bulls break past this level, they have a clear path until $750.

ethereum volume chart 122320

Moderate-to-strong support walls guard the downside at $615 and $585. All eyes will be on them to stop any further downflow. Adding further credence to our bearish outlook is the number of active addresses entering daily. As you can see, after the December 13 peak, the number has been steadily decreasing. This is not a positive sign.

ethereum addresses chart 122320

However, it’s not all doom and gloom. Data analytics platform Santiment noted that the BitMEX perpetual contract funding rates are back to the neutral territory for both BTC and ETH.

ethereum contract funding graph 122320

As such, the number of short traders will be reduced, decreasing the overall selling pressure on Ethereum.


GrayScale Halts Investment In Ethereum And Bitcoin Trusts

Digital asset investment manager Grayscale has temporarily halted investments into six of its trusts. These trusts include Bitcoin, Ethereum, Bitcoin Cash, Ethereum Classic, Litecoin and its Digital Large Cap Fund. The move comes just a few days after Bitcoin’s price broke $20,000 and surged to new all-time highs. 

The halt has taken place as the six-month lock-up period for selling recently-purchased shares of the Bitcoin fund came to an end. These Bitcoin fund shares are traded under the symbol GBTC. A Decrypt report cited a Grayscale spokesperson. 

We're just at that point in the year where those windows the public window will be closing. And then the private window will be open. 

Shares of the Bitcoin Trust under the ticker GBTC consistently trade at a higher price than the underlying Bitcoin. This is because of the buying pressure from institutional investors who have few alternative options for buying BTC. 

Even at a 30% premium to purchasing Bitcoin outright, GBTC shares are attractive to traditional investors because they’re available to buy and trade on existing stock exchanges. 

There could be another benefit to Grayscale for pausing the acceptance of new GBTC investments - buying BTC at a lower price. 


Key Price Levels To Watch For ETH

As mentioned, the $615 and $585 support zones are crucial. The buyers will hope that these barriers can inhibit further downtrend.

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