Consistent with the bearish market structure, Ethereum price suffered greatly in the first week of February. The value of the cryptocurrency fell more than 30% in a week, falling to $1,850 on Friday, February 6. Amid the Ethereum market downturn, a significant development has emerged that could make or break the world's second-largest cryptocurrency.
Ethereum Violates Realized Price Across All Investor Groups
In a recent post on Quicktake, on-chain analyst MorenoDV shared a shocking development within the Ethereum network. The analyst highlighted that the price of Ethereum has recently fallen below the cost basis of several investor groups.
This disclosure is based on realized prices from the Balance Cohorts metric, which monitors the average on-chain cost basis for Ethereum holders. The metric groups these investors by wallet size and shows where these groups are making profits or losing money.
In the chart above, we can see the Ethereum price falling below several cost bases (represented by the yellow, green, blue, and purple lines). However, what is most notable is the loss of realized prices for the largest holders (with more than 100,000 ETH stored), which amounted to approximately $2,074.
Historically, the realized price of this class of investors (holding more than 100,000 ETH) has played a dual role for the price of Ethereum, depending on its trajectory. Data from price action in 2019, mid-2020, and late 2022 show that whale realized prices typically act as strong resistance to prices during downtrends. In an uptrend, it interestingly acts as a stable support.
Therefore, during periods when the Ethereum price breaks below the whale realized price, MorenoDV explained that two potential paths typically emerge. In his words, “either a violent snapback rally occurs as the level reverses to support (2020, 2022), or a further capitulation to multi-year lows (2018-2019).”
Key ETH price levels to watch
What is noteworthy here is that the Ethereum price went through the realized prices of all investor cohorts simultaneously. MorenoDV noted that realized prices for small holders are in the range of $2,534 – $2,675.
Therefore, if the Ethereum price were to attempt to regain its previous range, the $2,534 to $2,675 price range would provide significant resistance to such efforts. However, the aforementioned range is not the most important range for Ethereum price.
The analyst highlighted the realized price of the group of whales (around $2,074) as the most important for the price of Ethereum. According to previous estimates, a recovery of this level would likely follow historical trends and push prices higher, while a failure to recover this level within 30-45 days could result in a significant decline.
If the latter scenario is true, the price of Ethereum could quickly fall to $1,800 or even lower. If the price falls below $1,800 and remains below this level, MorenoDV assumes this could lead Ethereum towards the $1,600-$1,300 level.
As of this writing, the value of Ethereum is $2,030, up more than 7% in the last 24 hours.
The price of ETH on the daily timeframe | Source: ETHUSDT chart on TradingView
Featured image from iStock, chart from TradingView
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