Why might ETH fall?

• Ethereum price looks set for a decline as it nears the key resistance level around $2,843.
• Lookonchain data shows that ETH founder Vitalik Buterin’s wallet deposited $534,000 worth of ETH to the Kraken exchange.
• Ethereum’s exchange flow balance shows positive growth, signaling a downward price movement.
• On-chain data shows that Ethereum development activity is declining, suggesting a bearish trend.
• A daily candlestick close above $3,396 would invalidate the bearish thesis.

Ethereum (ETH) price is set for a decline as it nears the key resistance area around $2,843. At the time of writing on Thursday, it is trading at $2,658, down slightly by 0.2%. On-chain data continues to support a bearish outlook, highlighted by a positive increase in Ethereum’s exchange flow balance and a decrease in development activity.

Additionally, Lookonchain data shows that ETH founder Vitalik Buterin has deposited $534,000 worth of ETH into the Kraken exchange, potentially increasing selling pressure and contributing to a bearish outlook for Ethereum in the coming days.

Ethereum price is set for a decline as it approaches the key resistance barrier

Ethereum is currently reviewing its 50% retracement level of $2,843 (calculated from the swing high of $3,562 on July 22 and the swing low of $2,124 on August 5). This retracement level closely aligns with the daily resistance at $2,927, marking it as a crucial resistance area. As of Thursday, Ethereum was trading at $2,658, down slightly by 0.2%.

If Ethereum price fails to rise above $2,843, it could drop 20% from the current trading level of $2,658 and reach the weekly support level of $2,118.

On the daily chart, the Relative Strength Index (RSI) and the Awesome Oscillator (AO) are trading below their neutral levels of 50 and zero, respectively, suggesting an imminent bearish trend.

ETH/USDT Daily Chart

The balance of Santiment Exchange Flow for ETH shows the net movement of tokens in and out of exchange wallets. A positive value indicates more Ethereum tokens coming in than exchanges going out, suggesting selling pressure from investors. Conversely, a negative value indicates more ETH left the exchange than entered, indicating less selling pressure from investors.

In the case of Ethereum, the Exchange Flow balance increased from -62,018 to 20,707 from Tuesday to Wednesday. This positive growth generally suggests increased selling activity among investors.

ETH Exchange Flow Balance chart

Additionally, the Ethereum Development Activity metric tracks the frequency of project development events recorded in the public GitHub repository over time.

An increase in this value suggests continuous efforts to maintain, innovate and improve the protocol, which is generally considered favorable by investors and stakeholders. Conversely, a drop in the metric could raise concerns about the project’s resilience, ability to innovate and engagement with the community in the near future.

In the case of Ethereum, the index fell sharply from 265 on Wednesday to 257 on Thursday, continuing a downward trend since mid-July. This indicates a steady decline in Ethereum development activity and suggests a bearish outlook for its price.

Chart of ETH development activity

Despite bearish signals from technical analysis and on-chain data, if Ethereum price manages to close above the July 29 high of $3,396, it will create a higher high on the daily chart, potentially leading to a 5 % to retest July 22nd. maximum of $3,562.