Ethereum is showing early signs of macro weakness, what to watch out for

Ethereum has been generating a lot of on-chain activity lately. Multiple metrics of its usage have surged to all-time highs, and by most measures, the cryptocurrency appears to be fundamentally sound.

That being said, this does not invalidate the technical weaknesses seen in recent times. The divergence between its fundamental strength and technical strength could be due to the expanding DeFi (decentralized finance) trend, which does not directly lead to value accumulation in ETH prices, at least not yet.

One analyst even noted that Ethereum has begun to show some signs of macro weakness from a technical perspective, with the analyst suggesting that the recent influx of funds into the market could trigger a sell-off among miners, further exacerbating this technical weakness.

Ethereum Shows Signs of ‘Macro Weakness’

At the time of writing, Ethereum’s price was trading at $219, down 4.36% from $229, a level it has been hovering at for the past day.

Over the past few months, ETH has been stuck in a trading range between $220 and $250, and each break below the lower boundary of this range has been short-lived in the past.

Analysts note that this time things may be different. One prominent anonymous trader explained that consecutive closes below $230 have triggered the first “bearish signs” in some time.

Analyst Cactus wrote on Twitter: "ETH price has closed below $230 for two consecutive weeks, and this week's candlestick is looking pretty bad now, with huge rejections in the past few days... First major signs of bearishness on the HTF chart."

Bitcoin price bearish Chart source: Cactus

This is another factor that could have an adverse effect on ETH

Analysts are also keeping a close eye on the outflow of funds from Ethereum miners as one of the factors that could have a serious impact on the price of Ethereum.

One trader explained that he is becoming increasingly cautious about the short-term prospects for Bitcoin and Ethereum due to this bear market catalyst.

He stated, “While I am very bullish on BTC and ETH over the next 12/24 months, there has been a huge spike in miners moving funds to exchanges over the past week… This typically leads to a big drop in cryptocurrencies, so be aware.”

Miner capital outflow analysis chart

In summary, considering the unfavorable factors in these markets, downward fluctuations may continue in the near future. It is recommended to wait and see and make a decision after the potential sell-off is over. (Baijiahao)