Ethereum (ETH) technicals spell a 13% drop, while on-chain metrics remain bullish

YEREVAN (CoinChapter.com) – Ethereum (ETH) gained over 60% in value since bottoming out near $1,000 on July 13. As a result, the second-largest crypto traded at just over $1,700 on Aug. 9. However, despite promising on-chain metrics, the technical indicators promised ETH bears a 13% drop.

ETH daily chart

The digital asset has traded inside a setup dubbed the ‘rising wedge’ since July 18. The formation entails two converging trendlines that take the asset value slightly higher before dropping it on another leg down.

Moreover, the drop could equal the maximal distance between the support and resistance. Thus, based on the bearish technicals, the target ETH price would stand at approximately $1,480, or 13% lower than the current value.

Also read: Ethereum post-Merge upgrade will make it a dominant blockchain — Bank of America.

Daily trading volumes have declined since the rising wedge formed, confirming the bearish outlook and hinting at a looming bias reversal. Meanwhile, Ethereum’s on-chain metrics appeared bullish against the choppy price action.

Ethereum Network grows

Despite the global market uncertainty, the Ethereum Network continued to grow, as evidenced by the increasing number of ETH holders, wide adoption of the upcoming ETH 2.0, and gradual increase in the overall number of Ethereum daily active addresses.

Thus, a closer look at the on-chain metrics is warranted.

The Network prepares for a transition to proof-of-stake consensus. Hence, the Ethereum hashrate dropped in anticipation of the Merge, as the latter will make ETH mining obsolete. However, the traders’ confidence in ETH 2.0, or ‘Serenity’ continued to grow.

Also read: Ethereum futures predict a bad, bad 2022 for ETH price ahead.

The chart above shows the total number of ETH coins deposited to the staking contract reached north of 12-13 million as of Aug. 2022.

Users bullish on Ethereum

Entrepreneur and investor Dang Quan Vuong also noted that the Ethereum Network will become more “decentralized based on the growing user base.”

In terms of decentralization, the expanding user base and the asset being fairly distributed to its stakeholders may have a positive effect on the network in the long-term horizon. In addition, a long-term balance across all unique addresses implies interest in holding and investing in Ethereum.

noted the expert.

Moreover, according to on-chain data source Glassnode, Ethereum derivatives traders got their hopes up, betting on ETH above $2,200 and up to $5,000.

Also read: Ethereum (ETH) Faces Hurdle, Start of Another Decline Or Buying Opportunity.