Ethereum is entering a critical phase as conflicting signals emerge across the market. On one side, the cryptocurrency is witnessing some of the heaviest selling pressure in its history. On the other, strong on-chain metrics, growing network activity, and long-term investor confidence are offering a counterbalance—raising the possibility of a rebound if key resistance levels can be reclaimed.
Sell Pressure Reaches Extreme Levels
According to data from CryptoQuant, Ethereum’s Net Taker Volume plunged to -$418.8 million in a single day, reflecting one of the largest sell-side imbalances ever recorded for the asset. In simple terms, this means that over 116,000 more ETH were sold than bought, as sellers aggressively used market orders to exit positions.
Historically, such deep negative readings have often coincided with local market tops or trend reversals. However, Ethereum’s price has shown surprising resilience, holding near $3,643 despite the intense sell-offs. This suggests that buyers are absorbing much of the downward pressure—for now.
Technical Pattern Under Threat
Until recently, Ethereum had completed a cup and handle pattern, a bullish formation typically signaling continued upward movement. However, the rally lost momentum before clearing the neckline resistance at $3,950, and ETH is now consolidating within a descending channel.
The Relative Strength Index (RSI) remains neutral at 57, indicating a lack of strong momentum in either direction. Unless bulls regain the $3,950 level soon, the pattern could be invalidated, leaving Ethereum vulnerable to further downside.
If support continues to hold in the short term, Ethereum may consolidate before its next significant move. However, failure to push higher could lead to a deeper retracement toward key support zones.
On-Chain Indicators Tell a Different Story
Despite the bearish sentiment reflected in price action, on-chain metrics suggest underlying strength in Ethereum’s fundamentals.
According to IntoTheBlock, new addresses on the Ethereum network have surged 29.94%, while active addresses climbed 3.17%. This uptick in user activity suggests growing engagement, which has historically provided a strong foundation for price recovery.
This divergence between on-chain growth and market selling points to a potential discrepancy between short-term panic and long-term value. Rising address activity could act as a buffer, helping Ethereum maintain support even as traders exit their positions.
Mixed Valuation Signals From Long-Term Holders
Additional insights come from key valuation indicators. The Network Value to Transactions (NVT) Ratio—which compares market cap to on-chain transaction volume—has risen, suggesting Ethereum may be overvalued in the short term relative to its current activity.
However, another metric tells a more bullish story. The MVRV Long/Short Difference, which compares the profitability of long-term holders versus short-term ones, remains elevated above 12.36%. This indicates that long-term holders are still sitting on solid unrealized gains and are not rushing to sell.
This ongoing conviction from seasoned investors adds a layer of support. As long as these holders remain firm, Ethereum may continue weathering near-term volatility and eventually mount another attempt to break above resistance.
Critical Resistance at $3,950
The next few days will likely be crucial for Ethereum’s trajectory. The $3,950 level has become a clear battleground. A successful reclaim of this level would confirm the bullish continuation pattern and could open the door to a fresh rally.
On the flip side, continued rejection at this level might validate bearish outlooks and prompt further declines, particularly if sell pressure intensifies.
What makes Ethereum’s situation especially complex is the tug-of-war between technical weakness and on-chain strength. The current divergence suggests that while traders are bracing for downside, the fundamentals have not deteriorated.
Final Thoughts
Ethereum is standing at a pivotal moment. The historic sell pressure, driven by panic-driven market orders, clashes with rising on-chain activity and strong holder conviction.
If ETH can reclaim the $3,950 level, it may regain momentum and move back into a bullish trend. But if resistance holds firm and selling resumes, Ethereum could face a more prolonged correction.
Either way, the current setup highlights the importance of watching both market psychology and on-chain data—two forces that are clearly at odds in Ethereum’s latest chapter.
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