Ethereum's price faced renewed pressure after failing to break a two-month downward trend. ETH attempted to recover briefly last week but lost momentum quickly.
Weak investor support has driven Ethereum down, raising concerns about its ability to sustain a meaningful recovery in the near term.
Ethereum loses investor support
On-chain data indicates a decline in profit levels for both long-term and short-term Ethereum holders. Both categories are now sitting at similar profitability levels, indicating a decrease in market confidence. This convergence suggests that neither group is realizing significant profits at the current price levels.
The "mvrv Long/Short Difference" index has dropped below the zero line, reinforcing this trend. The reading indicates that neither long-term nor short-term holders have dominant unrealized profits. If the index continues to decline, short-term Ethereum holders' profits may dominate, increasing the risk of a downturn and reflecting the fragility of investor confidence.
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The overall activity of Ethereum has shown a clear weakness. The number of active addresses on the network has dropped to its lowest level in seven months. This decline highlights a decrease in participation from ETH holders, indicating a contraction in interaction with the network during the current price weakness.
The decrease in activity indicates that investors see limited incentives to conduct trades amid stagnant price movement. A decline in network usage often reflects weak confidence. Without renewed demand or activity driven by incentives, Ethereum may struggle to regain momentum in the near term.
ETH is trading at $2,929, marking its third drop this month below $3,000. The attempt to break through Ethereum's price earlier last week did not hold. This rejection has reinforced the prevailing bearish trend and showed weakness in buying interest at higher levels.
Negative indicators suggest that Ethereum may retest the support level at $2,762. Historically, this range has represented a critical floor. While there is downward pressure, it seems that deeper pullbacks are limited unless the overall market conditions deteriorate significantly.
A shift in investor sentiment could change the outlook. It remains crucial to reclaim $3,000 as a support level. Sustained movement above this level may allow ETH to challenge $3,131. Such a recovery would invalidate the bearish hypothesis and indicate a breakthrough of the downward trend.
