The price of Ethereum’s native token, Ether, has rallied 78% since June 2022. But this is not a guarantee that it will continue to rise, especially considering that declining trade volumes suggest a high risk of a significant correction.
How Was Ethereum In the Past?
As the market plummeted in March 2020, Ethereum’s weekly chart displayed approximately 160 million ETH trades within a price range of $85 to $270. During that period, sales volume was estimated to surpass purchases by roughly 4 million ETH. Fortunately, Ether’s buying momentum quickly regained steam when prices soared above $270 in July of last year.
Evidently, there was a strong correlation between Ethereum’s trading volume and its price from July 2020 to November 2021. During this period, 64.25 million ETH trades took place in the $270-$450 range, while buyers outnumbered sellers by nearly 1 million tokens. This bullish trend intensified when Ether hit an all-time high of around $4,950 in November 2021 – demonstrating traders’ growing confidence that it would recover after the market crash caused by the COVID pandemic earlier that year.
So What Is the Current Situation in Ethereum?
Despite the impressive 75% recovery in ETH prices, alarmingly fewer traders have been involved this time around compared to when Ether first soared in March 2020. Even more concerning is that sales volumes have considerably risen during Ethereum’s recent price rebound. The early June 2022 volume profile for Ethereum reveals an alarming 12.50 million ETH trades – a 90% decrease from what was seen at the start of their 2020 bull run.
To illustrate, the “point of control” on daily charts – a red horizontal line representing the area with the most open trade positions- shows an overall net volume of 8.21 million ETH, which is approximately $1,550, and sellers have outperformed buyers by 170k ETH trades.
Consequently, Ethereum’s current price revival may not be as noteworthy as it was in March 2020 due to its two-year decrease in total volume profile.
The Majority of Ethereum Investors Are In Profit
By looking at one of the most followed Ethereum metrics, we can see that there are more bearish signals for Ether. As of now, 65% of ETH was acquired with lower prices, and investors could potentially take their profits if the price drops. With this being said, if bids on gains fall under 30%, it’s possible to reach the true bottom – mirroring previous market cycles and March 2020 lowest point levels.
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