Ethereum Analysis: Price Rises to $2,600 but Comes With Worrying Risks

The price of Ethereum (ETH) has surpassed the $2,500 mark for the first time since October 1st. However, while the market is optimistic, this price increase may not be as smooth as it appears.

In this analysis, BeInCrypto points out some on-chain indicators that suggest a significant portion of ETH's profits may be constrained.

Ethereum has not yet overcome its issues

The price increase of Ethereum represents a 6% increase over the past 30 days. In the past 24 hours, the trading volume of this currency has increased by 90%, indicating that investor interest in Ethereum is growing. However, data from IntoTheBlock shows that the Time Held of Coins for Ethereum has decreased by 56% in the past 7 days. Time Held of Coins indicates the period of time that investors hold a cryptocurrency without selling it.

Generally, the longer the holding time, the higher the potential for price appreciation, while shorter holding times often signal the potential for price declines. In the case of Ethereum, the recent decline in holding time suggests that, despite the recent price increase, ETH investors are still selling.

If this situation persists, the value of this currency may decline in the short term. The Network Value to Transactions (NVT) ratio is another indicator that supports a price decline. A high NVT ratio indicates that the market capitalization is higher than the value of transactions on the network.

On the other hand, a low NVT ratio indicates that the trading volume is outpacing the growth in market capitalization. While the former is a sign of a price decline, the latter is a sign of a price increase. According to Glassnode, the NVT ratio of Ethereum has increased in the past few days, suggesting that the price of ETH may be overvalued compared to the current market conditions.

ETH Price Prediction: May drop below $2,400

Looking at the daily ETH/USD chart, the ATR indicator remains stable. A low ATR indicates low volatility and the potential for reversal or continued accumulation. Conversely, a high ATR indicates increased volatility and the potential for continued price increases. Since this indicator is stable, it appears that the price of ETH may drop to $2,345. This would only happen if buying pressure decreases and the bears take control of the direction of this Altcoin.

The price of Ethereum could increase if the bulls ensure that the bears do not take control of the game. In that case, the value of this currency could rise much higher than $2,600, potentially reaching $2,983.

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