Ethereum Drops Below $4,000, Signaling Potential Market Recovery
Ethereum’s price has slipped once again below the $4,000 mark, currently trading around $3,727. This decline reflects a challenging period for the cryptocurrency, indicating a lack of immediate market support. However, on-chain data suggests that a reversal could be on the horizon, offering hope for investors.
Short-Term Holder Behavior and Market Sentiment
The recent price drop has caused many short-term holders to realize losses, as evidenced by the Short-Term Holder Net Unrealized Profit/Loss (STH-NUPL) ratio dipping into the capitulation zone. Historically, such phases—where short-term investors sell at a loss—often precede market rebounds. As selling pressure subsides, buying interest typically re-emerges, helping to stabilize prices.
This pattern has appeared in previous market cycles, and current conditions suggest Ethereum may be nearing a bottom. The easing of losses among short-term holders could pave the way for renewed investor optimism and a potential price recovery.
Long-Term Investors Show Confidence
Contrary to short-term holders, long-term investors remain resilient. On-chain data from HODL waves indicates that a significant portion of Ethereum’s supply is retained by long-term holders who show little interest in selling. Specifically, investors holding ETH for 3 to 6 months now control nearly 12% of the total supply.
This strong conviction among long-term holders provides a foundation for future price appreciation. Their continued support helps stabilize the market despite the recent volatility and price fluctuations.
Technical Indicators Point to Possible Price Reversal
From a technical perspective, Ethereum is currently testing a critical support level at $3,742. If it manages to hold this level, a bounce back toward the $4,000 mark is possible. Continued momentum could even push the price higher, potentially reaching $4,221—a rebound level seen in past recoveries.
However, the outlook hinges on sustained buying pressure. If Ethereum fails to maintain its key support and falls below $3,489, it could signal a deeper correction and invalidate the short-term bullish scenario.
Market Outlook and Investor Sentiment
Despite facing headwinds with its price below $4,000, Ethereum’s underlying market indicators hint at potential recovery. The combination of diminishing selling pressure among short-term holders and steadfast confidence from long-term investors creates a balanced and cautiously optimistic outlook.
In the coming days, Ethereum’s ability to defend support levels and attract renewed buying will be crucial in determining whether it embarks on a successful price reversal or continues its downward trend. Investors are watching closely, anticipating the market’s next move amid these fluctuating conditions.
https://coincentral.com/ethereum-price-dips-below-4000-recovery-signs-emerge-with-on-chain-data/
