Ether's Death Cross Threatens Further Downside as ETH Price Trades at Key Support Level

ETH's technical and on-chain indicators point to further decline, but there's a bright side.

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Ether price has fallen this week, and several data points are beginning to suggest that further decline may be in store.

On July 24, Ether (ETH) fell close to its monthly low, hitting $1,825 amid negative Bitcoin (BTC) price action, as uncertainty loomed over macro conditions and a possible whale selloff.

Several technical and on-chain indicators point to a further decline in ETH prices. However, the extent of this downward movement may be limited, given the profit levels of existing holders and the shrinking supply of ETH liquidity.

ETH On-Chain Analysis Suggests More Downsides

Since the start of 2023, Ethereum's network value versus transaction value (NVT) measurement has indicated that the asset may be overvalued.

Glassnode's NVT signal gauges the relative value of the Ethereum network by comparing market price to on-chain transaction volume. A higher NVT reading implies that ETH could be trading at a premium.

Glassnode's NVT chart reveals that the metric typically fluctuates between 30 and 80. However, in early 2023, it hit three-year highs of 120 and has maintained higher levels since then. This suggests that a pullback in price or an increase in Ethereum on-chain activity would be required to trigger a reset of this metric.

Ethereum NVT signal. Source: Glassnode

Nevertheless, both short-term and long-term holder profit levels suggest that the downturn may be limited.

The negative price action of Ether typically reverses when the Net Unrealized Profit/Loss (NUPL) measure of short-term holders is negative, meaning that short-term holders are at a loss. This causes some weak hands to panic, allowing buyers to pick up coins at...