ETH Bears Eye Sub-$1,850 on Bearish Principal Withdrawal Projections

Key Insights:

• On Saturday, ETH joined the broader crypto market in the red, falling by 4.81% to end the day at $1,900.
• Binance-related news and ethereum wallet movement weighed on investor sentiment.
• The technical indicators turned bearish, signaling a return to $1,850.

Ethereum (ETH) fell by 4.81% on Saturday. Partially reversing a 6.28% gain from Friday, ETH ended the day at $1,900. Despite the bullish session, ETH revisited the $2,000 handle for the second time since April 19.

A bullish start to the day saw ETH rise to a first-hour high of $2,020. Falling short of the First Major Resistance Level (R1) at $2,039, ETH fell to a mid-afternoon low of $1,864. ETH fell through the First Major Support Level (S1) at $1,915 before a partial recovery to wrap up the day at $1,900.

Vitalik Buterin and the Ethereum Foundation Return ETH to Sub-$1,900

Bullish investor sentiment toward the US economy and the Fed was short-lived on Saturday. After a first-hour session high, investors turned their attention to the US regulatory landscape and ETH wallet movement.

On Friday, news hit the wires of the US Department of Justice investigating Binance for possible breaches of sanctions against Russia. While crypto investors may be able to stomach increased regulatory scrutiny, the discovery of a sanctions breach would give the US administration a solid footing to the drive anti-crypto movement.

Repercussions of a breach could extend beyond the US borders. European investors and regulators may also respond to any findings that Binance facilitated sanction evasion.

On Saturday morning, investors also identified ETH wallet movement that fueled an extended sell-off.

Ethereum co-founder Vitalik Buterin and the Ethereum Foundation may have contributed to a broad-based crypto sell-off. Reports of the Ethereum Foundation sending 15,000 ETH to Kraken in response to a Buterin transfer of just 200 ETH to Kraken were bearish.

While the numbers are insignificant, the combination of a Buterin and Ethereum Foundation transfer of ETH to Kraken spooked investors. In November 2021, the Ethereum Foundation sent 20,000 ETH to Kraken. Significantly, the move came days after an ETH ATH high of $4,868 and preceded an ETH collapse to a June 2022 low of $879.80.

While the Ethereum Foundation’s ETH transfer to Kraken was bearish, staking statistics remained upbeat. However, a spike in withdrawals contributed to the Saturday losses.

ETH Staking Statistics Remain Bullish Despite Saturday Loss

Staking statistics failed to deliver support despite bullish numbers.

According to CryptoQuant, staking surged from 67,296 ETH on Friday to 176,960 on Saturday. Inflows reached their second-highest level since the Shapella upgrade.

The total value-staked continued rising despite the ETH return to sub-$1,900, supported by staking inflows.

Overnight, the withdrawal profile was more bearish. A higher projected volume of principal withdrawals was a bearish price indicator.

Staking inflows failed to deliver a positive net staking balance. On Saturday, the net staking balance stood at a deficit of 7,630 ETH, equivalent to $14.49 million. Deposits totaled 71,860 ETH versus withdrawals of 79,490 ETH.

According to TokenUnlocks, total pending withdrawals stood at 0.265 million ETH, equivalent to approximately $0.501 billion.

The Day Ahead

Staking statistics and the withdrawal profile will continue to influence investor sentiment. This morning, withdrawal projections are bearish for the session, with principal withdrawals projected to hit higher levels.

Investors should also monitor the net balance on TokensUnlock. A return to surplus would be a bullish price signal.

However, the crypto news wires will continue to influence. SEC v Ripple case-related updates and Binance and Coinbase (COIN)-related news would need consideration.

Ethereum Price Action

At the time of writing, ETH was down 0.19% to $1,897. A mixed start to the day saw ETH rise to an early high of $1,922 before falling to a low of $1,893.

ETH Technical Indicators

Resistance & Support Levels

ETH needs to move through the $1,928 pivot to target the First Major Resistance Level (R1) at $1,992 and the Saturday high of $2,020. A return to $1,950 would signal a breakout session. However, staking statistics and the crypto news wires must support a breakout.

In the event of an extended rally, the bulls would likely test the Second Major Resistance Level (R2) at $2,084 and resistance at $2,100. The Third Major Resistance Level (R3) sits at $2,240.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1,836 in play. However, barring another crypto market sell-off, ETH should avoid sub-$1,800 and the Second Major Support Level (S2) at $1,772. The Third Major Support Level (S3) sits at $1,616.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. Ethereum sat below the 50-day EMA, currently at $1,900. The 50-day EMA converged on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

A move through the 50-day ($1,900) and 100-day ($1,900) EMAs would support a breakout from R1 ($1,992) to target R2 ($2,084) and $2,100. However, a fall through the 200-day EMA ($1,885) would bring S1 ($1,836) into view. A move through the 50-day EMA ($1,900) would send a bullish signal.