Is Ethereum recovering from its correction after its new ATH or is it approaching a sell-off? As the bloodbath in the altcoin market continues, this is an ongoing question for many retail traders. While Ethereum ranks #1 in terms of trading volume but surpasses Bitcoin, the most important driving factor is the social volume and sentiment of retail investors.
Ethereum’s social volume is relatively small compared to its monthly activity. According to data from Santiment’s tables, Crypto Twitter has more traders talking about Ethereum than any other cryptocurrencies. While there is an expectation that social volume can translate into social capital, the likelihood of a gradual sale increases if people start selling and spreading news of a sale. This is the downside of Ethereum’s social layer and in addition, Ethereum’s MVRV is currently in the red zone. The asset may be over-inflated at the moment and it may be time for a fix.
The bearish entries in Ethereum have rebounded, which could mean that foreign exchange reserves are rising and it’s the end of the coin’s price discovery phase. Selling pressure on Ethereum has increased and there are signs that there may be a short-term cooldown period. Miners are known to give the most accurate prediction or signal for an asset, and when it comes to Bitcoin, miner activity provides insight into the direction of the price trend.
Mining activity at critical level
Based on miner activity, Ethereum miners are selling quite a bit. Sales from miners, in addition to covering their operational costs, indicate that there may be an upcoming sale and miners are leaving in front of institutions and retail investors.
The balance of miners has dropped below 1 million Ethereum for the first time in a long time, and miners may be selling since early December 2020. This raises concerns among traders as sales are fast and approaching soon. While there is expectation of price discovery beyond the new ATH, the price rally could go in the opposite direction this time, depending on what miners are implying at the moment.
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