Since Ethereum’s Shapella upgrade in April 2023, the price of ETH has not fallen below $1,600. Hoping for a positive momentum shift, bullish traders have placed active orders to purchase 643,000 ETH. Investor comments on social media are approaching extreme FUD levels based on historical data.
The recent price action has raised fears that Ethereum (ETH) price could lose the $1,600 support for the first time in six months. On-chain analysis examines vital data trends that suggest bullish traders could capitalize on the market’s rising FUD.
After surpassing the $2,000 mark in mid-July, the price of Ethereum (ETH) has entered its second consecutive month of decline. Despite the recent Grayscale spot ETF appeal win, the prevailing sentiment in the cryptocurrency markets has been predominantly bearish.
On-chain analysis examines how strategic cryptocurrency traders could flip the script by capitalizing on the market’s extreme fear, uncertainty, and doubt (FUD).
Cryptocurrency Investor Sentiment Nears Extreme FUD Levels
After almost two months of decline, the majority of cryptocurrency investors are now expressing bearish sentiment. According to Santiment, a crypto data analysis company, bearish stances dominated market discourse throughout September.
Interestingly, historical trends suggest this is a telltale sign that the market is approaching an inflection point.
Social volume measures the number of times a crypto topic is mentioned on relevant social media channels. In this context, mentions that a “bear market” will dominate social media commentary for an extended period indicate that investors are dysphoric. Typically, as market sentiment approaches extreme fear, strategic investors often interpret this as the perfect time to buy the dip, inadvertently triggering a price rally.
Historical trends show that this phenomenon occurred around March 8, when the USDC decoupling and Silicon Valley Bank bankruptcy triggered extreme FUD in the market. In response, the price of Ethereum skyrocketed 48% from $1,430 to $2,120 between March 11 and April 17. The recent extreme level of negative opinions is a vital indicator that this phenomenon could reappear in the coming days.
Strategic Traders Place Purchase Orders for $584 Million
Aggregate order books from 21 cryptocurrency exchanges currently show that bullish traders have placed active orders to buy 643,000 ETH for around $584 million. This is almost 50% higher than the existing sell orders of 431,000 ETH.
Within the current market dynamics, Ethereum has formidable support in the territory between $1,500 and $1,600. It is also a vital sign that strategic traders are taking action to capitalize on the prevailing bearish sentiment.
ETH Price Prediction: Consolidation Around $1,600 Before Breakout
From an on-chain perspective, current spot market demand levels mean that Ethereum price will likely make significant gains if momentum turns bullish. However, the bulls will face significant difficulties in reclaiming the $1,800 territory.
The In/Out of Money Around Price data highlights that 3 million investors had purchased 5.04 million ETH at the maximum price of $1,805. Without a significant change in market sentiment, they could sell off early and cause another Ethereum price drop.
However, if the bulls can overcome that resistance level, Ethereum price could avoid making another attempt at the $2,000 range.
In the unlikely event that the market FUD intensifies, the bears could force a major decline towards $1,400. However, 2.69 million addresses had purchased 4.1 million ETH at the floor price of $1,585. If they go for HODL, Ethereum price could rebound again. If that support level gives way, ETH price could begin to approach $1,400.
By Leonardo Pérez
