The global crypto market cap has dropped by $369 billion in the past week. Ethereum [ETH], as it stands, took the biggest hit during the past week among the top 10 cryptocurrencies. But the question is- What conspired against ETH as it plunged to new lows on 15 June?
Welcome to the carnage
For most cryptocurrencies, the bear market has signaled a period to adopt stop-gap measures and “wait and watch”. However, some major cryptos have been hit hard during these bearish conditions. Amidst the market sell-off, ETH is the worst hit among the top 10 cryptocurrencies over the past week.
The last two weeks have especially been very hard for Ethereum. The token experienced a massive liquidation volume across the market. The rumors of insolvency pertaining to Three Arrows Capital, as well as the block reorganization in the Beacon Chain have had an impact on the altcoin.
However, a prominent crypto analyst who goes by the name ‘Onchain Wizard’ on Twitter claimed another huge liquidation out of 3AC.
This wallet (tagged as 3AC on Nansen) has been aggressively paying back AAVE debt against its 223k ETH / $264mm position to avoid liquidation. With $198mm in borrowings against it, @ a 85% liq threshold, a -11% move in ETH to $1,042 liqudates ithttps://t.co/y7yJJ0NlMc pic.twitter.com/2S55Rzl9Xc
— Onchain Wizard (@OnChainWizard) June 15, 2022
Furthermore, ETH might also fall further after the FOMC meeting as the Federal Reserve is likely to raise the interest rate by 75 bps.
Ringing the bottoms
Ethereum is currently trading at its 17-month lows. It is down by almost 80% from its all-time high of $4,891 that the token stood at in November 2021. But the metrics indicate further downslides for the largest altcoin in the market.
As per the latest Glassnode updates, Ethereum’s data is suggesting that investors are experiencing massive losses.
In fact, the number of addresses in loss reached an all-time high of 38,011,694. This goes to show how far ETH has fallen during the current crash. Evidently, many investors have been unable to recover from the Terra crash before being faced with the current price drops.
With the on-chain transfer volume outpacing market cap growth, the NVT signal has dropped dramatically. The signal is showing another major bearish sentiment after touching a four-month low of 936.211.
Also, the MVRV ratio just reached a two-year low of 0.70 indicating another major hint of capitulation.
Ethereum investors should know this reasoning behind ETH’s crash in June
It has been hard for ETH traders to avoid panicking in the last few months as ETH continued to sell with no end in sight. The bears have been easing off their assault every once in a while, paving the way for minor relief rallies. However, even those have been short-lived and the bears continue to show their strength.
A similar scenario is taking place right now following ETH’s latest crash. The market has experienced a few days of relative calmness and some upside. Investors might, thus, expect ETH to experience another sell-off sometime soon if the market continues on the same trajectory. Understanding the key sources of the selling pressure is essential in order to gauge where the market might be headed.
It turns out exchange-traded funds (ETFs) holding large amounts of ETH have been selling off their holdings. 3iQ CoinShares Ether ETF (ETHQ.U) and Ether Fund (QETH.U) holdings are among the top ETFs that invested heavily in ETH in the past. Their Glassnode metrics reveal that they offloaded a significant amount of ETH in June.
The 3IQ Coinshares ETF offloaded roughly 82,886 Bitcoin between 1 June and 20 June. The Ether Fund ETF sold off roughly 87,385 ETH between 31 May and 20 June. Although these ETFs sold off large amounts of ETH, each of them holds more ETH than the amount they sold.
Catching the next wave
It is easily assumed that this means they will likely continue selling in the next few months given the amount they have left. However, the lower prices have been attracting heavy accumulation and strong growth in the number of users. ETH addresses holding more than 100 ETH have steadily increased in the last 12 months.
There were just over 42,000 addresses holding 100 ETH and above at the start of July 2021. That number grew to 44,343 addresses by 23 July. ETH had just over 121.5 million addresses by the start of July last year. However, those addresses had increased to 155.1 million by 23 June.
The increase in ETH addresses and balance in addresses especially since mid-June confirms the strong accumulation near the $1,000 price level. ETH’s 30-day MVRV ratio confirms that some address balances that accumulated near the latest lows are already in profit.
The MVRV ratio aligns with ETH’s latest recovery. It suggests that there is a strong buy wall near the $1,000 price level. However, the market is still full of uncertainty and the ETFs still have a lot of firepowers if they decide to sell some more.
Decoding the how and why of MATIC’s unprecedented hike
The broader market is reeling under significant sell pressure. However, MATIC’s bulls have successfully been able to bring impressive demand to its network. On 23 June, MATIC, out of all the top 20 coins, registered the most gains over the last 24 hours.
It saw a spike of 24.33% while its seven-day valuation rose by 30.02%.
The pricey tale
After hitting a bottom of $0.3178 on 18 June, the altcoin saw buyers recognizing its price value. Consequently, bulls entered the picture to take the crypto up to $0.5055 at press time. Even though MATIC has been forming green candles post 18 June, its current rally is not backed by enough volume.
Nonetheless, if bulls exert more pressure, MATIC might go up high to test its near-term resistance at $0.5735. Upon breaching it, MATIC will enter its supply zone. Only a rally supported by massive volumes can help the alt reach its 44-day long resistance at $0.7402.
The RSI, at press time, stood at 48.51, and was looking north. The MACD lay above its neutral line. This goes to show that traders can definitely expect some positive momentum before MATIC starts retracing back.
Reason for the sudden spike?
In a recent blog post, the Polygon network disclosed that it took the first step towards becoming carbon negative with the retirement of $400,000 in carbon credits representing 104,794 tonnes of greenhouse gasses, ‘or the entirety of the network’s CO2 debt since inception.’
As it were, the company’s step toward its first sustainability milestone strengthened investors’ faith in its ecosystem.
Furthermore, on-chain data provider Santiment revealed that MATIC’s sharks and whales have been showing renewed interest in the token. There has been a big accumulation trend forming for about six weeks.
🦈🐳 $MATIC sharks and whales have been in a pretty big accumulation trend for about six weeks. The tiers of holders ranging from 10k to 10m coins held have collectively added 8.7% more to their bags in this timespan. 📈 https://t.co/oasCn72rxt pic.twitter.com/lm4au2fWkn
— Santiment (@santimentfeed) June 22, 2022
Now, it’s important to note that whale accumulation can both be a boon and a curse. In the future, if whales decide to dump, MATIC’s price may suffer drastically.
Notably, for MATIC, whales’ volume constituted a share of 73.58% whereas retail volume had a share of 13.67%. It further signals the fact that long-term investors need to tread with absolute caution.
Furthermore, a quick on-chain analysis of the blockchain reveals that a total of 401.35k addresses are currently at loss, only 27.97k addresses are in profit. That is to say, just 6.38% of addresses are making money at the current price.
Another worrying sign for MATIC could be its rising correlation with BTC. The metric had dropped down to 0.32 on 9 June. However, it quickly surged to touch a value of 0.97 at press time. Evidently, Bitcoin’s capitulation event can reflect in MATIC’s price action.
Undoubtedly, MATIC holders are relieved looking at the current spike. But, they shouldn’t forget that this positive momentum is not going to last for many days.
Stellar’s [XLM] aggressive traders can leverage this pattern’s break
Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice.
Stellar [XLM], at press time, was consolidated while witnessing a fierce clash between the buyers and sellers near the Point of Control (POC, red). The recent drawdowns entailed a bearish pennant on XLM’s daily timeframe.
Any close below the pennant could pave a way for a decline in the coming sessions. The bulls needed to inflict an uptick in the buying volumes to invalidate the current bearish tendencies.
At the time of writing, XLM traded at $0.11233, down by 2.57% in the last 24 hours.
XLM Daily Chart
This bearish pull from the $0.2 marked a three-month trendline resistance (white, dashed) on its daily chart. The alt lost over 58% (from its April highs) and hit its 19-month low on 18 June.
This trendline resistance has constricted most recovery over the last few months. Consequently, the recent up-channel breakdown transposed into a bearish pennant. As a result, XLM fell below the 20 EMA (red) and exhibited a bearish edge.
Should the bears continue to ramp up their pressure, they would aim to break below the pennant. A close below this level could expose XLM to a downside toward the $0.1019-zone.
Should the buyers find renewed pressure, the immediate trendline resistance could undermine the buying efforts. Also, with the near-term EMA’s looking south, the sellers have reiterated their edge in the current dynamics.
The RSI has taken a bearish stance over the last few days. The 42-level resistance has bogged down the near-term buying efforts on the chart.
Furthermore, the OBV’s higher peaks over the last week marked a bearish divergence with the price action. This reading blended well with the ongoing bearish outlook.
Considering the current bearish pennant setup approaching the south-looking 20 EMA, XLM could see a potential decline. A break below the pattern could expose the alt to a 9% downside risk.
However, investors/traders should factor in broader market sentiment and on-chain developments to make a profitable move. This activity would be imperative to minimize the risk of any bearish invalidations.
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