Anticipated Ethereum Consolidation: Similar Patterns Predicted for 2022

Anticipated Ethereum Consolidation: Similar Patterns Predicted for 2022

Rewritten Article:

Headline: Ethereum Consolidation Comparison: Then vs Now

• Share
• Tweet

Ethereum [ETH] is currently trading below its realized price, signaling an average holder in a net unrealized loss position. But don't Count Your Losses Just Yet!

Sparked by whale capitulation, ETH hit a multi-year low of $1,400. Long-term holder (LTH) balances dwindled, and realized losses abounded in large wallets. Since that event, ETH has recovered by 25%, trading at $1,760 at press time.

But with ETH now trading 12% below its realized price of $2,002, the question arises— Is this rebound a mere tactical breakeven window, or is ETH laying the foundation for a bullish continuation?

Drowning Sorrows or Marching Forward?

Historically, a market in correction or consolidation is marked by underwater average holders. If a market mirror's 2018's capitulation, it may suggest an extended sideways-to-bearish spell. But current on-chain activity hints otherwise.

CryptoQuant data reveals a distinct pattern emerging within Ethereum's on-chain activity. Large inflows are reported into wallets, which have been notorious for their buy-and-hold behavior, registering the largest inflow since 2018.

While any rally towards $2,000 might confront profit-taking from underwater holders, making it a key overhead resistance level, these accumulation phases often precede significant price movements.

Keep Calm and Trust the Hodlers

Historically, underwater holders, confined within a range, tend to hold tight, heralding a more stable market environment. As a result, this trend signals potential support for future upside.

That being said, any consolidation phase's duration and extent are influenced by macroeconomic factors and the broader market's mood. An altcoin season, increasing institutional involvement, or positive developments on the regulatory front could all contribute to a positive shift in market sentiment.

In essence, the recent inflow of ETH indicates a potential consolidation phase that might be aligned with the 2022-2023 trend. However, it's crucial to keep in mind that market conditions and investor sentiment can alter this trajectory, either extending the consolidation phase or triggering a bull run.

• Share
• Tweet

Note: This article explores the historical patterns visible in Ethereum [ETH]'s on-chain activity and their potential impact on future price movements. In recent months, wallets known for their buy-and-hold behavior (silent accumulators) registered large inflows, equivalent to their largest influx since 2018. As a result, these trends suggest that underwater holders may fulfill a supporting role for potential future price upswings.

However, investors must be aware that broader market factors like macroeconomic circumstances, regulatory developments, and investor sentiment could potentially delay or accelerate Ethereum's consolidation phase, altering its expected trajectory.

1. Despite Ethereum [ETH] trading below its realized price, signaling an average holder in a net unrealized loss position, large inflows into wallets known for their buy-and-hold behavior could indicate potential support for future price upswings in 2023.
2. In the past, underwater holders, confined within a range, have tended to hold tight, suggesting a more stable market environment and potential support for future upside.
3. As ETH strives to break the key overhead resistance level of $2,000, cryptocurrency trading might confront profit-taking from underwater holders, which could be a sign of a consolidation phase aligned with the 2022-2023 trend.
4. While any rally towards $2,000 might reflect the historical markets in correction or consolidation, recent on-chain activity hints at a different scenario, suggesting a possible bullish continuation for Ethereum [ETH].
5. Long-term holder balances dwindled, and realized losses abounded in large wallets during the capitulation event, but CryptoQuant data reveals a distinct pattern emerging within Ethereum's on-chain activity with large inflows into wallets since that event.
6. An altcoin season, increasing institutional involvement, or positive developments on the regulatory front could all contribute to a positive shift in market sentiment, accelerating Ethereum's consolidation phase and triggering a bull run.

Read also: