Ethereum's Rise Shaken Despite Whales Accumulating 140,000 ETH... A Hidden Warning

▲ Ethereum (ETH)/ChatGPT generated image ©

Ethereum's price continues its upward trend, driven by a technical breakout and institutional demand, but deteriorating on-chain indicators are simultaneously flashing warning signs, leading to analysis that the market is heading towards an extreme direction.

According to the investment media TradingNews on May 5 (local time), Ethereum (ETH) was trading at $2,387, up $48.31 from the previous day, marking a 2.06% increase. Its market capitalization was approximately $233 billion, maintaining its second position after Bitcoin, and its 24-hour trading volume reached $15.76 billion. The price has risen by 4.16% over the past week, continuing its upward structure.

Technically, breaking above the 'bull flag' pattern has emerged as a key variable. Ethereum has broken through the resistance level near $2,370 and is maintaining the 61.8% Fibonacci retracement level at $2,381 as support. The upper resistance is in the $2,400-$2,460 range, and a breakthrough of this area could open up further upside potential to $2,577, $2,772, and then $2,800-$3,000. However, analysis suggests that a close above at least $2,466 is needed to confirm the upper boundary of the ascending channel.

While the short-term trend is strong, downside risks are also clear. If the $2,074 support level collapses, the ascending channel could break, opening a downward path to $1,831 and even $1,747. The current price structure is considered asymmetrical: upward movement requires additional trading volume and confirmation of a breakout, while a decline can unfold rapidly with just a breach of a specific support level.

Technical indicators also show mixed signals. The Relative Strength Index (RSI) is at 59.94, which is pre-overbought, but the Moving Average Convergence Divergence (MACD) shows signs of slowing down. While an upward trend is maintained in short-term charts, a bearish cross has occurred in the 15-minute chart, indicating upward fatigue. In particular, with the price clinging to the upper Bollinger Band and located in a resistance zone, there is a high possibility of increased short-term volatility.

On-chain data paints an even more negative picture. The number of daily active users decreased by 33% from 15 million to 10 million, and the average gas fee dropped to around 1 gwei, indicating weakened network demand. This weakens the EIP-1559 burning mechanism, reducing its supply reduction effect. Furthermore, net exchange inflows have also reversed. As of May 4, 60,449 ETH flowed into exchanges, signaling a shift from an accumulation phase to a distribution phase.

On the other hand, there are also strong bullish factors from the supply and demand side. Whale investors accumulated an additional 140,000 ETH over four days, and $101.2 million flowed into Ethereum spot ETFs. BlackRock attracted $43.2 million and Fidelity $49.4 million, showing a recovery in institutional demand. Simultaneously, liquidations totaling $117.84 million occurred in the last 24 hours, with $80.72 million of that being short positions, increasing the likelihood of a short squeeze.

Ultimately, the market has entered a collision zone between a technical upward structure and weakening fundamentals. A break above $2,466 would likely extend the uptrend, but a breach of $2,358 would break the short-term upward structure, and a collapse below $2,074 would significantly increase the possibility of a full downtrend reversal. The current phase is considered one where responding to levels is more important than direction.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses incurred based on it. The content should be interpreted for informational purposes only.*