Ethereum Plunges Below $1,700, Here’s The Metric That Signaled This In Advance

Keshav Verma

2 years ago

3 mins read

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Ethereum has plunged below $1,700 during the past day. Here’s the on-chain indicator that may have signaled this dip in advance.

Ethereum Age Consumed Metric Saw A Spike Before The Price Decline

According to data from the on-chain analytics firm Santiment, institutional investors look to have been expecting the move to take place. The indicator of interest here is the “ETH age consumed,” which first finds the total number of coins moving on the Ethereum blockchain. Then it multiplies this value by the days these coins had been dormant before their movement.

So, in this way, the metric keeps track of how many coins are being sold/moved each day and uses their age as a weighting factor. This means that many old coins are moved to the network whenever this indicator’s value is high.

Naturally, low values of the metric, on the other hand, would imply that there aren’t many coins moving on the chain right now or some coins with a low average age are being transferred.

Now, here is a chart that shows the trend in the Ethereum age consumed over the past month:

Looks like the value of the metric has been quite high in recent days | Source: Santiment on Twitter

As displayed in the above graph, the Ethereum age consumed metric had recently registered a very large spike. This would suggest the potential movement of many dormant coins on the chain during this surge.

Generally, when such large spikes in the indicator are observed, it’s a sign of selling from the long-term holders (LTHs). The LTH cohort includes all the investors holding onto their coins since more than 155 days ago.

These holders are the experienced hands in the market who don’t easily sell even when the market is distressed. Because of this reason, their movements can be something to watch out for, as when they do finally sell, it’s usually not a positive sign for the price.

The chart shows that the LTHs had also shown a large move earlier in the month. Shortly after these investors became active, the cryptocurrency price plunged.

This time, the spike in the Ethereum age consumed also seems to have preceded a price decline, as the cryptocurrency’s value has now dropped below the $1,700 level.

This latest price plunge has come after the news that the US Federal Reserve isn’t raising interest rates this time, but more hikes would be coming later in the year to fight inflation.

Santiment suggests that the spike in the age consumed metric before the price decline could imply that the institutions already expected the move, hence why they shifted their coins early.

ETH Price

At the time of writing, Ethereum is trading around $1,600, down 11% in the last week.

ETH has taken a plunge recently | Source: ETHUSD on TradingView

Featured image from iStock.com, charts from TradingView.com, Santiment.net

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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