- Ethereum price tried breaching the upper trend line of a supply zone at $2,889 but failed.
- As long as ETH stays above $2,689, the upswing narrative will not be in jeopardy.
- On-chain metrics indicate that a potential drop should not come as a surprise.
Ethereum price rally is currently facing a blockade that could make or break its advance. While the technicals indicate that an upswing is plausible, on-chain metrics paint a rather somber picture for ETH.
Ethereum price at crossroads
Ethereum price was on a tear as it entered the supply zone extending from $2,689 to $2,889 with the goal of breaching it. However, Elon Musk’s timely tweet has kept this from occurring. Despite a 6% drop, ETH has managed to stay inside this resistance area.
If this were to happen, ETH could rally 11% to tag the immediate supply level at $3,117. Following this, Ethereum price could rise 10% to pre-crash levels at $3,442.
ETH/USD 4-hour chart
Supporting the bullish outlook is the supply of ETH held on exchanges, which has decreased from 21.98 million to 21.61 million ETH since May 25. This 1.6% decline suggests that some of the inventors are optimistic about the short-term performance of Ethereum price.
However, the same metric shows a 300,000 ETH increase over the past month, indicating that the overall trend for Ether held on centralized exchanges is increasing, which is a bearish development.
Therefore, market participants should exercise caution due to conflicting views.
ETH held on exchanges chart
Adding to holders’ woes is the 365-day Market Value to Realized Value (MVRV) model, revealing that ETH has more room to head lower.
This fundamental index is used to gauge the profit/loss of users who purchased Ether in the past year. Currently, the 365-day MVRV is hovering around 57% after crashing from 158% on May 11.
Since a large percentage of investors remain in profit, there is a high chance these participants might book profits and add to the selling pressure, pushing Ethereum price lower.
While things seem to be going up for Ethereum price, investors should note that a failure to stay inside the supply zone’s lower boundary at $2,689 will signal the inability of the buyers.
A convincing close below the June 1 swing low at $2,528 will invalidate the bullish scenario.
Such a move might trigger a 10% downswing to $2,275, which is the swing low created on May 31.