Ethereum (ETH) has been facing growing bearish pressure recently, and market watchers are increasingly concerned that the price could decline toward the psychological $3,000 level. This follows a wave of selling activity across both long-term and short-term holders, alongside other key indicators pointing to a potential downturn. However, the presence of large ETH holders, known as whales, may still play a crucial role in determining whether Ethereum can stabilize or fall further.

Increased Selling Activity: Long-Term and Short-Term Holders Join the Exodus

Over the past week, Ethereum has been battling heightened bearish sentiment, largely driven by significant selling activity from both long-term and short-term holders. This uptick in selling pressure comes after ETH suffered double-digit losses in the previous week. A closer look at the Ethereum Weighted Sentiment—a metric that measures social volume and overall sentiment—shows that the asset has remained in negative territory, well below its neutral level. This suggests that investors are feeling increasingly pessimistic about Ethereum’s near-term prospects.

Adding to the bearish narrative, Ethereum’s Network Realized Profit/Loss metric has revealed that many investors have been selling off their holdings to lock in profits or limit their losses. In just the past 24 hours, investors realized over $340 million in profits and $30 million in losses, further highlighting the overall negative sentiment surrounding ETH at the moment.

Ethereum’s Dormant Circulation Shows Strong Selling Activity

The Dormant Circulation metric, which tracks the movement of previously inactive ETH, also reveals spikes in activity over the last few days. These spikes indicate that both long-term and short-term holders have been part of the recent sell-off, contributing to the overall bearish trend. This type of activity typically signals a shift in market sentiment, as more investors choose to exit their positions amid uncertain conditions.

Whales Buy the Dip: A Sign of Confidence or a Temporary Reversal?

Despite the ongoing selling pressure, Ethereum’s exchange reserves have shown a downward trend, with a significant number of ETH being withdrawn from exchanges. This withdrawal activity, particularly from whales holding between 100K to 1 million ETH, could indicate that large investors are preparing for a potential price recovery. These whales recently increased their holdings by 410,000 ETH over the past two days, suggesting that they remain confident in Ethereum’s long-term potential, even as prices experience short-term volatility.

However, it’s important to note that if these whales decide to stop buying the dip or if market sentiment continues to sour, Ethereum could face additional declines. The question remains whether these whales can sustain their buying momentum, or if the broader market’s bearish outlook will dominate.

Ethereum ETFs: Mixed Inflows Amidst Market Uncertainty

Meanwhile, Ethereum exchange-traded funds (ETFs) have continued to show resilience, recording a net inflow of $62.7 million last week. Despite experiencing some outflows on Thursday and Friday, these ETFs have maintained their inflow streak for four consecutive weeks. This ongoing demand for Ethereum-based products, particularly from institutional investors, may offer some support for ETH’s price, even as retail sentiment weakens.

Ethereum Price Forecast: Could ETH Drop to $3,000?

Ethereum’s price has been hovering within a critical range between $3,250 and $3,423. The $3,250 level is particularly important, as it represents a key support zone for ETH. Should Ethereum break below this level, there is a risk that it could decline further toward the $3,000 psychological support level. This target is derived from a double top pattern that formed earlier in December, with the $3,000 level representing the neckline support.

In addition to this, Ethereum’s 100-day and 200-day Simple Moving Averages (SMA) could help reinforce the $3,000 support zone. If ETH breaks through this level, however, it may confirm a rounding top pattern, which could push the price even lower toward the $2,000 psychological level. The $2,817 support level could act as a cushion in such a scenario, though further declines would need to be carefully monitored.

Bullish Scenario: Can ETH Bounce Back?

On the other hand, if Ethereum manages to hold above the $3,250 level, there could be potential for a price recovery. For a more substantial uptrend to resume, ETH would need to recover the $3,550 support level with a high-volume move. A strong recovery above this level could suggest that Ethereum’s recent bearish trend has been exhausted, and a resumption of the uptrend could be in the cards.

In terms of momentum indicators, both the Relative Strength Index (RSI) and the Stochastic Oscillator (Stoch) are currently below their neutral levels, indicating that the market remains tilted toward bearish sentiment. However, a daily candlestick close above $4,093 could invalidate the bearish thesis and signal a shift toward bullish momentum.

Conclusion: What’s Next for Ethereum?

Ethereum’s short-term outlook is highly dependent on the actions of whales and the broader market sentiment. While the selling pressure from long-term and short-term holders is significant, the ongoing withdrawals from exchanges and the buying activity from large ETH holders provide some hope for a price rebound. However, if the $3,250 support level is breached, Ethereum could be on track for a decline toward the $3,000 psychological support level, with the $2,817 support zone providing additional protection.

For now, Ethereum’s fate remains in the balance, and investors should closely monitor the $3,250 and $3,000 levels for any signs of a shift in momentum.

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