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In the past week, the price of Ethereum (ETH) has seen a decline of about 6.2%, presenting a challenging period for the cryptocurrency. Despite analysts predicting further drops, Ethereum’s price has remained relatively steady over the last 24 hours, showing a marginal increase of just 0.1%. While this minor change may not seem significant on its own, both on-chain data and technical analyses hint at a possible shift in the market landscape, suggesting more significant developments may be on the horizon.

Reengagement of Short-Term Investors

An essential factor potentially driving Ethereum’s recovery is the reactivation of short-term investors, often those who hold Ether for only a few days or weeks. This group of investors, who had been reducing their positions in recent weeks, has begun to re-enter the market. On-chain data reveals that the share of wallets holding ETH for one week to one month increased from 6.9% on July 22 to 9.19% on August 21 within the total supply.

Similarly, wallets holding ETH for one day to one week saw their share jump from 1.64% on August 8 to 2.74% by August 21, marking a 67% rise in market share for this group in less than two weeks. Experts suggest this behavior from short-term investors may indicate the formation of a local price bottom, potentially signaling the start of an upward movement in Ethereum’s market.

The editor, Harsh Notariya, commented, “The reactivation of short-term wallets could signal that Ethereum’s price has found a base.”

On-Chain Data: SOPR Indicator Points to Lower Bound

Another key indicator, the Spent Output Profit Ratio (SOPR), sheds light on whether coins are being sold at a profit or loss. A high SOPR suggests profit-taking by investors, whereas values near or below one generally occur when less profit is realized often during price dips.

In the past week, ETH’s SOPR value decreased from 1.11 to 1.03. A similar pattern occurred on July 31 when the value fell from 1.10 to 1.01, subsequently followed by a 31% price surge from $3,612 to $4,748.

Market analysts suggest, “As the SOPR value drops, selling pressure decreases, creating opportunities for buyers.”

Inverse Head-Shoulders Pattern in Technical Analysis

Technical analysis also presents a positive signal. Ethereum’s four-hour charts reveal the formation of an “inverse head-shoulders” pattern, considered a classic reversal signal. The neckline of this pattern is approximately at $4,379 and is currently exhibiting a slight upward tilt.

Experts anticipate that if Ethereum surpasses the $4,443 level, the technical target would be around $4,770, bolstered by short-term investor demand and SOPR data. Moreover, rising green bars in the Bull Bear Power indicator signal strengthening buyer influence in the markets.

According to TradingView data, “If the price falls below $4,207, this model may be invalidated, weakening bullish expectations.”

In conclusion, recent trends in the Ethereum market, including the resurgence of short-term investors, supportive SOPR indicators, and technical analysis signals, point towards a potential upward move. However, realizing technical targets will depend on Ethereum crossing critical price thresholds.

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