Ethereum (ETH), the second-largest cryptocurrency by market capitalization, may be teetering on the edge of a significant correction, with analysts expressing concerns about the current price levels. Ethereum has not been immune to the ongoing market volatility that has affected most assets.
Particularly, cryptocurrency analyst Ali Martinez, in an X (formerly Twitter) post dated September 6, highlighted the need for concern, pointing out that Ethereum’s trading price at $1,680 could potentially pave the way for a drop towards $1,200.
“Ethereum below $1,680 is a cause for concern, as it may pave the way for a significant $ETH correction down to $1,200,” he said.
Martinez shared an analysis from the crypto analysis platform IntoTheBlock, which revealed that the number of addresses purchasing Ethereum within the range of $1,285 to $1,681 was quite limited. This scarcity could potentially lead to a price decline to $1,200, given the reduced activity at these price levels.
Martinez’s statement is in line with the prevailing market sentiment, which has witnessed Ethereum struggling to maintain its price above this critical level. Notably, the analyst has previously cautioned that ETH could correct as far as $1,000.
The analysts emphasized that a breach of this pivotal support zone could open Ethereum up to substantial downward vulnerabilities, potentially initiating a notable correction ranging between 37% and 45%.
ETH holders in loss
Furthermore, a significant factor contributing to these concerns is the increasing percentage of Ethereum holders who are currently in a loss position. Data by crypto analysis platform IntoThe Block reveals that the percentage of Ethereum holders holding at a loss has surged from approximately 27% in early July to a striking 44.2% as of September 4. This is the highest level observed since the beginning of the bear market, with the previous peak reaching around 50%.
The substantial increase in the number of Ethereum holders facing losses raises questions about the overall health of the market and whether a turning point is imminent. Historically, when a substantial portion of holders are underwater, it can trigger panic selling and further drive down the price of the cryptocurrency.
Ethereum price analysis
By press time, Ethereum was already correcting, trading at $1,631, recording weekly losses of over 5%.
It’s important to highlight that Ethereum is currently confronting various risks, primarily stemming from the overall market volatility.
Notably, market participants believe that Ethereum stands to gain from regulatory clarity, especially if the token can capitalize on the potential approval of a spot Bitcoin Exchange Traded Fund (ETF) in the United States.
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