Ethereum, the world’s second-largest cryptocurrency, is struggling to hold its ground after failing to breach the $5,000 mark earlier this month. With increasing profit-taking and over $2 billion worth of ETH sent to exchanges in just one week, market signals point towards growing downside pressure. Analysts warn that unless fresh buying momentum steps in, Ethereum could face a deeper correction in the short term.
Selling Pressure Intensifies
Ethereum is currently trading at $4,433, sitting just below the critical $4,500 resistance level. The coin’s inability to sustain a recovery above this zone highlights the fragility of current market conditions.
The most pressing concern stems from the sharp rise in exchange inflows. On-chain data reveals that over 521,000 ETH, worth approximately $2.3 billion, was transferred to exchanges in the past week alone. Such large-scale inflows typically point towards investors positioning themselves to sell, which amplifies the risk of sustained downward moves.
Market watchers note that this rotation of capital often reflects a shift from accumulation to distribution phases, where long-term holders begin to lock in gains. The pattern currently unfolding in Ethereum mirrors past cycles of heavy selling, followed by significant price retracements.
MVRV Ratio Signals Profit-Taking
Another key indicator flashing red for Ethereum is the Market Value to Realised Value (MVRV) ratio, which now stands at 2.15. In simple terms, this suggests that on average, ETH holders are sitting on more than double their initial investment.
Historically, such levels have coincided with profit-taking phases. Notable precedents occurred in March 2024 and December 2020, both of which were followed by heightened volatility and sharp price declines.
The current environment appears no different, as profit-taking has become widespread. This aligns with the inflows to exchanges, reinforcing concerns that Ethereum’s near-term outlook is weighed down by distribution activity rather than accumulation.
Key Levels to Watch
Technical indicators highlight critical support and resistance zones for Ethereum. The immediate support lies at $4,222. Should ETH fail to hold this level, it could trigger a slide towards $4,007, exposing the asset to deeper losses.
On the flip side, if selling pressure eases and buyers step back in, Ethereum could bounce from $4,222 and reclaim $4,500 as a support level. A decisive move above this could set the stage for a recovery towards $4,749, a level that would restore some short-term bullish momentum.
For now, however, the broader sentiment remains cautious. The inability to reclaim $4,500 underlines the dominance of sellers, and without renewed inflows of demand, ETH risks drifting into lower ranges.
Market Sentiment Turns Cautious
The broader market narrative surrounding Ethereum has shifted from optimism to caution. While long-term fundamentals remain intact driven by network upgrades, decentralised finance activity, and institutional adoption, the immediate outlook appears clouded by short-term selling dynamics.
The alignment of technical and on-chain signals adds weight to the bearish case. Elevated profit-taking, rising exchange inflows, and weakened resistance zones all point towards a vulnerable setup for Ethereum. Unless the trend of distribution slows, the cryptocurrency could find itself under pressure to test lower supports in the coming weeks.
Ethereum’s struggle to hold above $4,500 comes at a critical time for the market. Investors face a choice between locking in substantial gains or betting on renewed bullish momentum.
If history is any guide, the combination of an elevated MVRV ratio and heavy inflows to exchanges suggests that profit-taking could dominate in the short term. For traders and investors, the $4,222 support and $4,500 resistance levels will be crucial markers in determining Ethereum’s next move.
