The price of Ethereum’s native token, Ether (ETH), shows a lot of conflict among traders about the direction of the market for March. This uncertainty has caused the price of ETH to consolidate in a narrow sideways range between $1,600 and $1,700 since February 15th.
25% ETH price correction on the table in March
The uncertainty stems from Ethereum’s long-awaited Shanghai upgrade going live some time in March.
Some analysts predict the Shanghai token unlock feature, which will enable stakers to withdraw vested tokens from Ethereum’s proof-of-stake smart contract, will trigger a short-term selloff event.
The Ethereum PoS smart contract has attracted more than 17.4 million ETH (~$28.35 billion at current exchange rates) since its launch in December 2020, according to Etherscan.
In addition, Ether finds it difficult to break above some technical resistance. The Ethereum token has tried to reverse the $1,650-1,700 area for support several times since August 2022, as shown by the red bar in the chart below.
Interestingly, each failed breakout attempt led to a strong pullback to the common support line – the multi-month uptrend line (black).
Therefore, if history is any indication, ETH’s next correction could potentially be near $1,250, a 25% drop from current levels. On the contrary, a break above $1,650-1,700 ETH position for the range of $1,925-2,000 (purple) is the next upward target.
Future sales of ETH will be limited – data tracker
From an on-chain perspective, due to the longer Ether price crash it seems less likely.
In particular, there has been a huge drop in the supply of ETH on the exchange since September – from about 30% to 11%. Theoretically, this reduces immediate selling pressure as capital moves to the margins.
“The trend in crypto, especially since September, has quickly shifted its own custody,” said Santiment, adding:
“The trend is up after FTX collapse. Regardless, with both BTC and ETH around 5-year exchange supply low, the future sell-off will be limited.”
In addition, the data analytics company CryptoQuant has reached the same conclusion about the potential selloffs of Ether in the future, especially after the Shanghai hard fork.
Related: 3 tips for trading Ethereum this year
CryptoQuant noted that 60% of the purchased ETH supply – about 10.3 million ETH – is currently at a loss. Meanwhile, Lido DAO, the largest Ethereum staking provider, holds 30% of all ETH staked with an average loss of $1,000, or 24%.
“Typically, selling pressure arises when participants have extreme profits, which is not the case with ETH bought today,” writes CryptoQuant:
Additionally, ETH’s most profitable was assessed less than a year ago and has not seen significant profit-taking events in the past.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making decisions.