As the week began today, analysts are predicting if Ethereum (ETH) will turn bearish near the $4000 mark with some key developments happening over the weekend like an increase in whale transactions and large holders flow becoming negative.
Large transactions of Ethereum showed an exponential jump over the weekend, as the weekly transaction volumes went up more than 300% to reach $17.15 billion. However, it later came down to $7 billion.
Ethereum whale activity of over $100,000 jumped significantly as the coin rallied to $4,000.
The crypto exchange net flows revealed a decreasing selling pressure which means that ETH is nearing key resistant levels with strong support levels and a bullish momentum outlook
Recently, large transactions in Ethereum have increased significantly as IntoTheBlock data revealed it rose to $17.15 billion on Friday, December 6 which triggered a curiosity about price movement for the cryptocurrency as it is nearing key resistance levels.
Data from Santiment shows a spike in whale transactions of above $100,000which indicates a surge in institutional investors' interest in the coin or high-net-worth activity. As this is in line with Ethereum touching $4,000 it could mean that crypto whales are redistributing holdings or raking their profits.
The large transactions chart shows there are periodic peaks which suggests a strategic movement during volatile prices. Meanwhile, the crypto exchange netflows chart highlights alternating inflows and outflows. The recent outflows point towards a decreasing selling pressure as the chart analysis revealed an over 17000 negative netflow.
This typically means that crypto traders moving their holdings to cold storage and a bullish sentiment. But Ethereum has encountered a resistance level near the $4,000 mark which coincided with profit-taking.
The price chart of the digital asset shows a consistent uptrend since the first week of November with the 50-day moving average giving considerable support.
This caused the recent rally to $4,000, leading to a substantial increase in trading volume which in turn indicates strong market participation during the price movement.
But Ethereum's RSI of 69.52 showcases an upcoming overbought territory which might lead to a price consolidation or correction phase.
However, the MACD is maintaining its bullish momentum and remains above the zero level which suggests that the upward trend will continue. The histogram though is pointing towards a decreasing bullish intensity which means a slowdown is likely if not a complete reversal.
The key support levels for Ethereum are at $3,800 and $3,500, where the 50-day moving average and previous resistance levels were.
The current uptick in whale activity and large transactions show growing market interest in Ethereum which could eventually improve the fundamentals of the coin.
The price movement is pointing towards a healthy uptrend with important support levels going strong and technical indicators favouring the bullish trend. But despite all this, traders are monitoring the resistance near $4,000 to understand if there is a cooling-off period.
Pivot near the $4000 mark with anticipation of liquidations above it
As per the IntoTheBlock data large holder outflows for ETH have overtaken the large holder inflows as the inflows declined to 280,700 ETH on Saturday, December 7 while the outflows were at 312,920 ETH.
This suggested a sell pressure build-up as most high outflows point to that. However, there are other indicators of that like the $4,000 uptick extended the bearish divergence with the RSI.
This suggests a pivot is possible as the coin has encountered resistance near the $4,000 mark recently. Hence, retesting this level will result in a spike in profit-taking activity.
The cup and handle pattern formation further added to the sell pressure observation as the recent price rally completed the curve part of the pattern, indicating a handle part will start soon.
This final part of the pattern is a pullback which means traders and similar patterns are likely to form at $3,315 and $3,050 levels. This resulted in the shift in long vs short ratio with short positions increasing to 52.13% from 50.3% over the last 3 days.
All these points towards short-term sell pressure but it could also turn out the other way as seen in the surge in large transactions.
If it goes higher than the $4000 mark liquidation conditions might be triggered, resulting in trades buying more Ethereum to cover their losses.
But this scenario is dependent on the open interest and exchange flows, which have shown higher outflow of 180,562 in the last 24 hours compared to an inflow of 140,781 coins.
The high open interest at $27.54 billion backed by positive funding rates points towards investors' interest in the derivatives as they are optimistic about the uptrend.
This is in line with the green zone seen in the spot market while positive flows cooled down during the weekend. It potentially means sell pressure might take over as we progress through the next few days while the 2025 Ethereum outlook remains bullish.
As of December 9, Ethereum is trading at $3815, down 4.31% in the last 24 hours with a 53% surge in its trading volume which is now at $32.4 billion while market cap went down to $459.07 billion.