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Ethereum Drops 10% After Breaking Through This Historical Barrier
According to an explanation from the blockchain analytics company Glassnode in a recent post on X, the increase of ETH has stalled after the price of this asset reached the level of the historically relevant valuation model.
The model mentioned here is "Active Realized Price", which, in summary, informs us about the cost basis of investors or the average address on the Ethereum network. This indicator differs from the regular Realized Price in that it excludes inactive or lost supply from the data. The following is a chart shared by Glassnode showing the trend of the model as well as the standard deviation (SD) +1 of the model over the past few years:
As shown in the chart above, Ethereum has recently traded above the Realized Price, indicating that holders of this asset are on average holding some unrealized net profits. The recent price increase has pushed this cryptocurrency well beyond this level and has actually retested the +1 SD threshold. From the chart, it can be seen that this threshold is currently around $4,700. This is the price level that the asset peaked at last week before starting to decline by about 10%. Therefore, it seems that this level could serve as a resistance level. According to the analysis company, this is nothing unusual, as this level has often acted as a barrier in previous cycles. The explanation for this trend may lie in the fact that this level is around the profit margin of investors large enough to trigger a mass sell-off motivated by profit-taking. In the current cycle to date, Ethereum has been able to break this line once, in March 2024. However, this breakout only lasted for a short time, indicating that selling pressure once again poses a significant obstacle to the upward momentum. In other news, last week was the strongest week for Ethereum (ETF) exchange-traded funds since their launch in the United States, as Glassnode pointed out in another post on X.
As can be seen in the chart above, US spot Ethereum ETF funds saw a surge in net inflows last week, with 649,000 tokens of this asset being added to wallets linked to these funds. The coin has risen above $4,700 as this inflow occurred.