Historic Sell-Pressure Hits Ethereum
Ethereum’s native token, Ether (ETH), may be forming a local top as its selling pressure approaches a historic extreme. According to data from CryptoQuant, the network’s Net Taker Volume dropped to -$418.8 million on Tuesday, marking the second-largest daily outflow ever. This metric indicates a significant market imbalance, with 115,400 more ETH sold than bought via market orders.
These “taker” trades prioritise execution speed over price, often suggesting urgency or fear among traders. A massive sell-side imbalance of this magnitude has historically been a strong indicator of a local market top, casting doubt on the sustainability of Ethereum’s current rally. This unprecedented level of selling pressure from market participants is a critical signal that the asset’s upward momentum may be faltering.
The $4,000 Challenge: A Crucial Test for Ethereum’s Rally
The latest surge in ETH sell-side pressure coincided with the price testing a historically significant distribution zone. This major resistance zone, located between $3,600 and $4,000, has repeatedly acted as a formidable ceiling for Ethereum’s price since 2021. The market’s inability to decisively break through this level has often resulted in a price reversal.
The current retest of this zone is therefore being watched closely by traders and analysts, as it represents a crucial point of contention between bulls and bears. A failure to clear this resistance could signal a significant lack of buying conviction at these higher prices, increasing the probability of a corrective move. The confluence of a major price barrier and a massive increase in selling pressure creates a challenging environment for Ethereum’s current rally.
Echoing the December 2024 Price Top
The current market setup for Ethereum bears a striking resemblance to a similar situation in December 2024. At that time, Ethereum’s price was also trading near the same $3,600–$4,000 resistance zone, and the Net Taker Volume turned sharply negative, mirroring the heavy sell-side imbalance seen today. What followed that period of consolidation and heavy selling pressure was a steep 66% decline, with the price collapsing towards its 50-week and 200-week exponential moving averages (EMAs).
This historical precedent serves as a cautionary tale for the current market. The combination of a key technical resistance level and a sharp increase in selling urgency suggests that a similar outcome could unfold, with the market potentially repeating past patterns in response to these powerful signals.
Ethereum Price: Analysts Forecast 25-35% Decline to $2,300
Analysts are now forecasting a potential price decline for Ethereum, with some suggesting a drop of 25% to 35% in the coming months. This bearish outlook is based on the confluence of several negative signals. As ETH retests the $3,600–$4,000 resistance zone and the Net Taker Volume plunges, the weekly relative strength index (RSI) is also cooling from overbought levels, which often precedes a price correction.
The combined weight of these bearish signals increases the probability of ETH retreating towards its key moving averages. The 50-week EMA and 200-week EMA, currently located at approximately $2,736 and $2,333, respectively, are being eyed as potential price targets by September or October. This predicted decline would be similar in magnitude and trajectory to the collapse seen in late 2024, highlighting a potential path for the asset in the coming weeks.
Taker Volume and Market Urgency
The Net Taker Volume metric provides valuable insight into the market’s underlying sentiment by tracking the difference between buying and selling executed through market orders. These “taker” trades are driven by urgency, as traders prioritise execution speed over securing the best possible price. A massive imbalance where taker sells volume significantly outweighs taker buys, as seen with the -$418.8 million outflow, indicates a strong sense of fear or urgency among sellers.
This suggests that a large number of market participants are keen to exit their positions quickly, regardless of the price. This behaviour is often a leading indicator of a local market top, as it signifies a loss of confidence in the asset’s ability to continue its rally. The shift from patient, limit-order-based trading to urgent market selling is a crucial signal that market dynamics may be changing.
Weekly RSI Cooling from Overbought
Another technical signal casting a bearish shadow over Ethereum’s current rally is the cooling of its weekly Relative Strength Index (RSI). The RSI is a momentum oscillator that measures the speed and change of price movements, with a reading above 70 typically indicating that an asset is overbought. As Ethereum’s price approached the $4,000 resistance zone, its weekly RSI showed signs of pulling back from these overbought levels. This indicates that the buying momentum, which had previously propelled the price upward, is now weakening.
A cooling RSI from overbought territory often precedes a price correction, as the market takes a pause and re-evaluates its position. When combined with other bearish signals like plunging Net Taker Volume and a retest of a major resistance zone, a falling RSI provides a strong warning that the asset may be due for a significant pullback in the near term.
Ethereum’s High-Risk Environment: Awaiting a Decisive Move
The current market situation for Ethereum is characterised by a powerful confluence of bearish signals that collectively suggest a potential local top is forming. The combination of a historic sell-side imbalance, a retest of a major multiyear resistance zone, and a cooling weekly RSI creates a high-risk environment for a sustained upward move. This pattern is eerily similar to the setup that preceded a massive 66% decline in late 2024.
While the crypto market is inherently volatile, the presence of these indicators in conjunction provides a strong warning to investors about the sustainability of the current rally. The market is waiting for a decisive move, and based on the current data, the probability of a corrective phase has increased. The next few weeks will be crucial in determining whether Ethereum can defy these signals or whether it is indeed headed for a significant pullback.
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