Bitcoin and Ethereum activity shows major risk of crypto crash in coming days

Bitcoin and Ethereum Tracks

The on-chain activity of Bitcoin and Ethereum appears precarious, and without significant improvement, the two leading crypto-currencies could experience major corrections.

Bitcoin appears to have developed a Bart pattern after a pullback on Tuesday. Bitcoin rose from a low of $18,700 and briefly broke at $20,390 on Tuesday. However, it has since fallen, erasing its gains to a low of $18,480.

From an onchain perspective, investors are showing little interest in accumulating bitcoins at current prices. Addresses holding between 1,000 and 10,000 bitcoins have sold or redistributed about 50,000 coins worth about $950 million in the past week. The growing selling pressure could soon have an impact on the price of bitcoin.

Transaction history shows that bitcoin is sitting under a significant supply wall with some considerable demand walls below. About 1.26 million addresses bought 685,000 bitcoins at an average price of $19,000. A further decline could prompt these investors to exit their positions to avoid further losses. Given the lack of support levels, Bitcoin could see a drop to $16,240.

Bitcoin needs to reclaim the $19,000 level as soon as possible as support to have any chance of invalidating the bearish outlook. If it does, it could head for the recent high of $20,390, marking a crucial break above the psychological $20,000 level.

Ethereum has also experienced high volatility over the past 24 hours, losing nearly 150 points in market value. The erratic price behavior coincides with a significant drop in activity on the chain. The number of new ETH addresses created per day has dropped by more than 50% after hovering above 60,000 addresses over the past week.

In general, a steady decline in the number of new addresses created on a given blockchain leads to a sharp price correction over time.

IntoTheBlock’s IOMAP model shows that further downward pressure could bring Ethereum to $1,180, where 500,000 addresses hold about 1.19 million ETH. But if that level of support doesn’t hold, the correction could extend to $1,000.

Ethereum must climb and print a daily close above $1,300 to invalidate the bearish thesis. If it can do that, it could recover and climb towards $1,450.