Ethereum's bearish signals

Reading time: 5 minutes

Despite bearish signals, Ethereum's on-chain metrics show healthy network growth

Key Points:

  • A prominent crypto analyst noted that an Ethereum indicator flashed a sell signal

  • ETH whale transaction showed a large deposit into a centralized exchange

News- Ethereum saw a potential shift in market sentiment away from the bulls after a strong performance in February. Technical analysis by Ali Martinez showed that the Tom Demark (TD) Sequential indicator fired a sell signal on Ethereum’s 3-day chart.

The price action on the 29th of February saw Ethereum rise to $3,520 before dropping to $3,340. It remains to be seen whether the powerful indicator’s signal will be vindicated.

Whale transaction adds to potential FUD - To reinforce this bearish finding, data from LookonChain highlighted a notable whale transaction of 4,000 ETH worth $13.3M into the Kraken exchange.

The wallet address that moved the ETH is linked to the Ethereum Foundation. It received 39,006 ETH from EthDev on the 6th of January. Its balance stands at 33,006 ETH, but the large offloading to a centralized exchange raised concerns among investors.

Metrics remained healthy otherwise - Despite these bearish discoveries, other on-chain metrics were positive. The network growth metric advanced higher in February, reflecting an increased number of ETH addresses created. This could lead to greater demand for the token.

Token velocity, which reflects the frequency of ETH moving between addresses, also ticked higher. This was a sign of rising activity on the network. The gas usage also pointed toward high activity. Conversely, the number of NFT trades fell lower.

U.S. Govt. transfers ~$1B of BTC seized from Bitfinex hacker

Key Points:

  • Seized funds from the Bitfinex hacker were moved on the 28th of February

  • The movement as prices crossed $60k caused some concern among bullish investors

News - Two crypto wallets that Arkham Intelligence has tagged as holding seized Bitfinex hacker funds transferred $1B in Bitcoin to an unidentified address on 28th February.

The attack by the hacker, Ilya Lichtenstein, occurred in 2016. He and his wife Heather Morgan were arrested in February 2022 by the U.S. government on allegations of conspiring to launder $4.5B in hacked Bitcoin. They pleaded guilty to money laundering conspiracy in connection with the Bitfinex hack in August 2023.

How it happened - One of the three wallets that Arkham Intelligence has tagged moved 1 BTC at 18:39 UTC. The remaining 2,817 Bitcoin in the wallet were sent roughly half an hour later to the same address.

Another of the three wallets, this one containing 12,300 BTC, transferred 0.01 BTC to another unidentified address shortly after the first two transactions. It was quickly followed by the remainder of the BTC sent to the same wallet. The total Bitcoin transferred had a value of $923M.

Arkham Intelligence noted that another wallet with 94,600 BTC of seized Bitfinex hacker funds remained affiliated with the U.S. government.

The timing and motive - This massive Bitcoin move happened over four transactions on the same day that prices reached the $60k mark for the first time since November 2021.

The Justice Department did not comment on the purpose behind this Bitcoin transfer. However, an official confirmed that these transactions were law enforcement-related and were legitimate.

Binance Chain registers the highest unique user count as prices pierce $400

Key Points:

  • The Binance Smart Chain was ranked first for unique users

  • The exchange token prices sailed past a nearly two-year high

News- The Binance ecosystem saw positive news arrive at the beginning of March. The price of the BNB token rocketed past the $400 psychological level, while the Binance Smart Chain was revealed to have 425.9 million unique users as of 1st March.

Other networks lagged by a sizeable distance. Ethereum had 259 million, while Tron Network was even lower at 214 million. Only Polygon cracked the 400 million mark, standing at 406 million.

Investors in raptures as volume rises - A closer look at the BNB Chain revealed that the on-chain volume had been increasing in recent weeks, reaching a peak of $1.4B on the 28th of February. This marked the highest volume recorded in over a year and was also the highest level the metric reached in 2024 thus far.

The Total Value Locked has also trended higher, standing at $4.9B on the 29th of March. On the same day, the volume slid to $1.04B, but the uptrend remains in place.

The psychological resistance is breached - Binance Coin prices reached levels not seen since April 2022. The one-day price chart showed that the 29th of February saw a 3.73% loss for the exchange token BNB as prices closed the day at $399.4. Yet, the buyers continued to defend the $400 mark.

The RSI on the daily chart continued to show overbought conditions, but that was not indicative of an imminent pullback. Instead, it serves to highlight the strength of the bulls.

Experts say Bitcoin has too much demand, not enough supply

Key Points:

  • Experts believe that the Bitcoin ETFs triggered a new era of price discovery.

  • Another wave of institutional investment could arrive in a few months.

News- In an interview with CNBC on February 29th, Bitwise’s CIO Matt Hougan said that the supply-demand dynamic was “off the hook”. This level of institutional capital has blown Bitwise’s initial 2024 prediction of $80,000 for Bitcoin out of the water.

When pressed for a renewed prediction, Hougan said he expected prices could go anywhere from $100,000 to $200,000 or even higher. This was because he expects “an even bigger wave coming in a few months” once “major wirehouses turn on”.

This is just the trailer - Hougan stated in the interview that the first wave of Bitcoin ETF interest came primarily from retail, hedge funds, and independent financial advisors.

Major wirehouses such as Bank of America Merrill Lynch and Wells Fargo started offering spot Bitcoin ETF to clients. Morgan Stanley is reportedly evaluating adding these to its platforms.

A watershed moment for crypto - Mike Novogratz, founder of Galaxy Digital, asserted that this is the first time anyone wanting Bitcoin exposure has easy access.

Meanwhile, Cathie Wood, founder of ARK Invest, said that Bitcoin is not just a technology anymore, but a new asset class in the global monetary system. The flood of institutional investment, if it is just beginning, has nearly forced Bitcoin to just 12% below its all-time high. Continued demand alongside the finite BTC supply means only one thing - higher prices and greater relevance in global finance.

Crypto Scams Uncovered

  • The Blast ecosystem saw a $1.3M rug-pull on a project it had claimed had undeniable potential in a post on X (formerly Twitter). The project, RiskOnBlast, was said to be a gambling and exchange platform that raised $1M from investors in a seed round the week before the rug pull. On 25th February, Sunday, all of its social media accounts were scrapped. Of the 420 ETH raised from 750 wallets, $497k was sent to the swapping service ChangeNow. Another $360k was sent to the MEXC exchange and $187k to Bybit.

  • AnubisDAO, the dog-inspired DeFi project, raised 13,556 ETH from investors in October 2021. Just 20 hours into the “fundraising”, the project rug pulled by sending funds to different wallets, leaving investors in the mud. In July 2023, almost two years after the incident, the funds were moved in 100 transactions using TornadoCash, a decentralized protocol that allows private transactions. In doing so, the perpetrator aimed to obscure the trail of the funds.

  • Developer of the Mutant Ape Planet nonfungible token (NFT) Aurelien Michel, pleaded guilty in U.S. Federal Court to an international scheme to defraud buyers and agreed to pay $1.4M in forfeiture. He also faced five years in prison. The Mutant Ape Planet NFTs amassed close to $3 million before Michel, posting under the pseudonym “James”, admitted to the rug pull in the community’s Discord channel.

Top 3 coins of the day

Cardano (ADA)

Key Points:

  • A range breakout appeared imminent.

  • An increase in trading volume accompanied the rising bullish momentum.

What you should know- ADA was trading at $0.691 at press time, just above the range highs at $0.68. This range has been in play since mid-December 2023, nearly 80 days old. The breakout meant ADA is projected to reach $0.912, with the $0.787 also expected to serve as a strong resistance. The 12-hour chart of Cardano showed a bullish structure and momentum, with the RSI reading at 68. A failure to climb above $0.7 over the next few days could see prices sink below $0.64. In this scenario, a drop to the mid-range support at $0.555 would be likely and could present swing traders with a buying opportunity.

Filecoin (FIL)

Key Points:

  • The $8.5 resistance region continued to pose a stern test for the bulls.

  • A move past the $10 level appeared to be only a matter of time given the demand in recent weeks

What you should know - Filecoin was in a strong uptrend throughout February. It gained 83.12% from the low to the high for the month. These levels were at $4.85 and $8.88, respectively. The Fibonacci retracements plotted showed the 50% and 61.8% levels sat at $6.89 and $6.49, marking them as firm support levels. To the north, the 23.6% and 61.8% extension levels at $9.36 and $10.65 were take-profit targets. The OBV indicator has sailed past a level that served as resistance earlier this year and was yet to retest it as support even as prices encountered resistance at the $8.5 zone. This was just above the high set on the 1st of January at $8.11. Therefore, the increase in buying volume reinforced the idea that prices are likely to trend higher.

Avalanche (AVAX)

Key Points:

  • The Fibonacci levels highlighted key areas of interest.

  • A breakout past $50 could herald a larger move northward.

What you should know - Avalanche saw a large pullback from $43.64 to $35.14 in the third week of February. Despite this 19.48% move downward, the bulls were able to re-establish an uptrend after forcing a move above the $38.2 resistance level on the 26th of February. At press time, the $48-$50 supply zone was in the crosshairs of the buyers. The RSI showed firm bullish momentum with a reading of 63 on the 12-hour chart. The trading volume has also been significantly high over the past few days. Whether AVAX could break past the $50 zone remains to be seen, but the evidence at hand supports this conclusion.

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