Ethereum (ETH), a leading altcoin, has been trading below the $3,500 mark for a week straight, reflecting a prevailing bearish sentiment across the cryptocurrency market. From its intraday high of $3,744 on January 6, the value of this digital coin has dipped by 13%.
Despite this slump in price, several key on-chain metrics point towards Ethereum holders’ optimism about the altcoin’s near-term prospects.
Among the indicators that suggest resilience among Ethereum traders is the rising estimated leverage ratio (ELR) of ETH. According to data from CryptoQuant, this particular metric has maintained an upward trajectory despite the recent drop in ETH’s price. As of the time of writing, ETH’s ELR stands at 0.60, marking a 20% increase over the past month, notwithstanding a 15% fall in its price during the same period.
The ELR gauges the average leverage that traders employ to execute trades on a cryptocurrency exchange. It is determined by dividing the asset’s open interest by the exchange’s reserve for that specific currency.
The rising ELR of ETH reflects heightened risk appetite among its traders. This suggests that despite the current price weakness of this altcoin, its traders are increasingly ready to embrace risk. A persistently high leverage ratio indicates a strong conviction among traders that the price of ETH is set for a rebound, regardless of the recent headwinds.
In addition, the exchange reserve of ETH has declined to a two-month low of 19.19 million ETH, with the quantity in exchange wallets shrinking by 2% in the last week. This decrease implies that market participants are reducing their selling pressure and opting to hold onto their ETH tokens.
Consequently, it seems that the recent fall in ETH’s price is more driven by the broader market’s bearish trends than by significant selloffs of ETH itself.
At the time of writing, ETH is trading at $3,226, slightly above the support level at $3,186. If the broader market sentiment turns positive and ETH accumulation accelerates, its price could ascend towards $3,563.
Nevertheless, if the market persists in its downturn, ETH may test the $3,186 support. If this level does not hold up, the value of this digital coin could decline to $2,945.
In the final analysis, although the short-term price movement of ETH seems uncertain and is largely influenced by the broader market conditions, the on-chain metrics indicate that Ethereum traders remain resilient and optimistic about its near-term prospects.
