Ether (ETH) fell to $2,800 on Monday and failed to take care of the $3,000 mark as rising expectations of a Bank of Japan rate hike unsettled the market. Meanwhile, technical and on-chain data sent mixed signals regarding Ether's ability to buck the downtrend.
Key points:
-
Ethereum price fell 5.5% on Monday and fell below $3,000 again on fears of a rate hike by the Bank of Japan.
-
For a robust recovery, bulls need a sustained break above $3,200, while a break above $2,800 would negate the macro uptrend.
-
Ether’s MVRV Z-Score is approaching the buildup zone, signaling the formation of a neighborhood bottom.
The price of Ether is between two key levels
Ether's 18% rally from a low of $2,620 hit on November 21 was slowed by selling across the psychological barrier of $3,000.
This “was key support that has currently was resistance,” pseudonymous analyst That Martini Guy₿ said in an X post on Friday.
Note that the 50-week moving averages (yellow wave) and 100-week moving averages (blue wave) look like converging here (see chart below), highlighting the importance of this level.
“If $ETH breaks through this level and stays there, we should always see the value rise back into the mid-$3000s throughout December!” This martini guy ₿ added.
ETH/USD weekly chart. Source: Cointelegraph/TradingView
Glassnode's cost base distribution heatmap revealed one other resistance area higher up between $3,150 and $3,230, where around 5.1 million ETH were acquired.
On the opposite hand, the ETH/USD pair traded above a key support area around $2,800, where 3.6 million ETH were previously purchased.
ETH currently has “a superb grip on the important thing support area,” said analyst Daan Crypto Trades in a recent X post, referring to the $2,800 to $2,850 support zone.
The altcoin could see “very clear devaluation if it breaks below these local lows,” the analyst wrote, adding:
“This is a key area for the Bulls to defend.” 
On the positive side, in line with Daan Crypto Trades, an increase above $3,350 would see ETH price approach the high of $4,000.
“$2,850 and $3,350 are the degrees which might be essential on this area.”
As Cointelegraph reported, buyers are expected to vigorously defend the $2,800-$2,600 support level while bears mount a defense on the 20-day EMA around $3,100.
Inflows into Ethereum ETFs indicate bullish sentiment
Ether's ability to counter a deeper correction was boosted by inflows into US-based Ethereum spot exchange-traded funds (ETFs).
Ether ETFs ended Thanksgiving week with $312 million in inflows, suggesting the worst of the institutional cryptocurrency selloff could also be over.
Meanwhile, global Ethereum exchange-traded products (ETPs) recorded $309.1 million in inflows last week, reinforcing ongoing demand from institutional investors.
However, Ether's ability to remain above $2,800 and reclaim $3,000 may very well be limited by an absence of network demand, data from Nansen shows, as evidenced by the drop in Ethereum network fees.
Ethereum chain fees totaled $2.68 million over the past seven days, down 54% from the previous week. In comparison, fees on Solana increased by 2%, while those on Tron remained relatively flat, increasing by 0.4%.
The variety of lively addresses on Ethereum's base layer increased by 20% over the identical period, while the variety of transactions increased by 4%. This suggests that increased user engagement could ultimately result in increased on-chain demand for ETH, driving the value higher.
Ether’s MVRV Z-Score suggests a neighborhood bottom
Ether's MVRV Z-Score, a key on-chain metric for identifying market highs and lows, is approaching the historical accumulation zone (the green line within the chart below), reinforcing the argument that ETH could also be making its local bottom.
The last time Ether's MVRV Z-Score fell to its current level around 0.30 was in June, following a 25% price decline. This coincided with a neighborhood market low at $2,100 and preceded a multi-month rally that saw ETH/USD surge 134% to its all-time high of $4,950.
As Cointelegraph reported, most Ethereum valuation models suggest that the highest altcoin is undervalued and project ETH prices above $4,000.
This article doesn’t contain any investment advice or recommendations. Every investment and trading activity involves risks and readers should conduct their very own research when making their decision.
