The price of Ethereum (ETH) fell 7% early Thursday morning. This is how the markets reacted to the latest rate decision by the U.S. Federal Reserve
The U.S. Federal Reserve paused at its June 14 meeting – the first time since it began raising rates in March 2022. Unfortunately for crypto investors, the regulator made it clear that the pause could be temporary and could be followed by new rate hikes.
This has reduced investor enthusiasm, especially amid the ongoing regulatory crackdown in the US, and negatively affected the rates of BTC, ETH and other cryptocurrencies.
Onchain data, meanwhile, shows that long-term Ethereum holders are showing weakness. Does this mean that ETH is set for a long bearish period?
Long-term investors in Ethereum show weakness
With the current market turmoil on the Ethereum network, there has been a significant outflow of funds by some long-term investors. According to Santiment’s 90-day Mean Coin Age indicator, there has been a network-wide sell-off, especially among long-term investors.
The Mean Coin Age Indicator estimates the average number of days that all outstanding coins remain at current wallet addresses. It reflects long-term investor sentiment.
The chart below shows that this indicator fell 9% between June 4 and June 15, from 37.87 to 34.56.
Ethereum (ETH) and the metric Mean Coin Age. Source: Santiment
When this figure drops significantly over a short period of time, it indicates that investors are unloading many coins stored for a long time. This could negatively impact ETH prices, as strategic investors may interpret this as the beginning of a network-wide sell-off.
If the sell-off continues, the token may not attract enough demand.
If the selling continues and the token fails to attract enough demand, the bearish trend could continue in the coming weeks.
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Overall market sentiment has slipped into critical negative territory
In the past week, overall market sentiment for ETH has slipped into critical negative territory. Santiment’s Weighted Sentiment Indicator measures the ratio of negative to positive mentions of an asset on social platforms.
As the chart below shows, this indicator has remained below the critical 2.0 zone since June 9.
Ethereum (ETH) and social sentiment. Source: Santiment
This means that for every optimistic view of Ethereum, there are more than two negative views and that bears are now firmly in control in the media sphere.
If this trend continues, it could force a significant portion of potential ETH investors into a bearish mindset in the coming days.
However, the ongoing sell-off in the network and the extremely negative sentiment may cause ETH to decline.
ETH forecast: possible drop to $1500
From the above factors, ETH could fall below $1500 in the coming weeks. However, first the bears need to overcome the initial support at $1600.
In accordance with IntoTheBlock stats of Global In/Out of Money Around Price (IOMAP, the bears need to overcome the initial support at $1600.
According to IntoTheBlock’s Global In/Out of Money Around Price (IOMAP) stats, there are 2.3 million investors who have bought 2.6 million ETH at an average price of $1,607.
If the bears are able to overcome this support zone, ETH will likely fall to $1500.
Ethereum (ETH) and IOMAP data. Source: IntoTheBlock
That said, the bulls could take the upper hand if ETH rises above $1700 again. However, a “sales wall” that has formed around the average price of $1704 could get in the way. As you can see above, a cluster of 1.34 million investors owning 2.33 million coins could start selling at that price.
If the bulls overcome this resistance, ETH could climb further to $1900.