Ethereum has experienced a significant correction following a remarkable rally that saw its price surge by over 85% since late June. The cryptocurrency reached a peak near $3,940 before pulling back approximately 13%, leading to discussions among analysts about whether this pullback signifies a healthy consolidation phase or a shift in market sentiment. While some experts believe that the retracement is a natural pause after a rapid uptrend, others are cautious about potential selling pressure and macroeconomic uncertainties that could trigger further downside movements.
Despite the recent price drop, on-chain data from CryptoQuant reveals a different story unfolding beneath the surface. A substantial amount of Ethereum has been consistently withdrawn from exchanges over the past few weeks, indicating aggressive accumulation by investors who are moving their holdings into cold storage. This trend suggests a bullish signal, as it signifies that holders are positioning themselves for long-term gains rather than preparing to sell. With Ethereum’s continued dominance in areas such as DeFi, stablecoins, and Real-World Asset (RWA) tokenization, this structural demand could establish a solid foundation for price stability and future rallies.
Ali Martinez, an analyst, has disclosed that over 1 million Ethereum (ETH) have been withdrawn from exchanges in the last two weeks, highlighting a strong accumulation trend among investors. This significant outflow diminishes the liquid supply of ETH available for trading, a trend that historically aligns with bullish price action over the long term. Despite Ethereum’s recent 13% correction from its peak, the consistent withdrawal of coins suggests that investors are gearing up for the next upward movement.
This accumulation pattern mirrors the behavior seen in Bitcoin over the past year, where BTC experienced a similar trend of exchange outflows that paved the way for a massive bull cycle. Analysts are optimistic that Ethereum could follow a similar trajectory, given the solid fundamentals supporting ETH, including its leadership in DeFi, stablecoins, and RWA tokenization.
While market sentiment remains largely bullish, there are some risks to consider. Recent US job data release has sparked short-term panic, creating volatility across both crypto and traditional markets. However, many analysts view Ethereum’s current correction as a healthy retracement and an opportunity to accumulate ETH at a discounted price before the market resumes its upward trajectory.
In terms of technical analysis, Ethereum is currently trading around $3,391 after a sharp correction from its recent high of $3,940. The 12-hour chart indicates that ETH has broken below its short-term support and is now testing the 50-day SMA at $3,462, which could serve as a near-term support level. If bulls fail to defend this zone, the next critical support lies around $2,852, a key level that previously acted as strong resistance in late June.
Despite the recent correction, Ethereum’s price structure remains in an overall uptrend, with higher highs and higher lows maintained on the broader timeframe. The correction appears to be a retest of previous breakout levels, as ETH had surged over 85% since late June. It is crucial for bulls to maintain the $3,350-$3,450 range to regain control and make another attempt towards the $3,860 resistance zone. Failure to hold this level could trigger a deeper correction towards the 100-day SMA at $2,972.
In conclusion, Ethereum’s recent correction may be viewed as a healthy consolidation phase amidst a broader uptrend. With strong accumulation trends and solid fundamentals supporting the cryptocurrency, Ethereum could be well-positioned for future price stability and potential rallies in the long run.