Ethereum, the second-largest cryptocurrency by market cap, has recently experienced a moderate price jump of 5% within the past week. However, this price movement is coinciding with a significant amount of profit-taking transactions among traders. While some might view this as a bearish signal, it could actually indicate that Ethereum is gearing up for a push toward the $2,000 mark.
Typically, for a sustained uptrend in any asset, we expect a considerable number of traders to be "hodling" or holding their positions. This action reflects confidence in the asset's potential for further growth. At the moment, Ethereum's ratio of profit-taking transactions is high, which usually suggests a bearish sentiment.
🤑 #Ethereum is getting a large amount of profit taking transactions after a mild +5% price jump the past week. Typically, we want to see a lot of traders #hodling, and if this ratio comes down to earth, it would be a signal $ETH is on its way to $2,000. https://t.co/lQyVya3rqj pic.twitter.com/F2QvD5gpno— Santiment (@santimentfeed) June 3, 2023
However, this is not the only factor to consider when forecasting Ethereum's future price action. We are also witnessing a decrease in trading volume accompanying the current downtrend. Often, a descending volume during a downtrend can signal a potential reversal in the short-term. Traders and investors use this indicator to predict when the selling pressure is starting to decrease, which can often precede a price turnaround.
Another crucial point to consider is that despite the high number of profit-taking transactions, Ethereum's price has not been significantly affected. While many traders are realizing their profits, this has not resulted in a sharp price drop for Ethereum. This situation could mean that Ethereum's price is quite robust and could be ready to bounce upward once whales or large traders stop taking their profits.
As we look toward the future, these factors could contribute to pushing Ethereum toward the $2,000 price level. Ethereum's declining volume in the downtrend and resilient price indicate that it could be poised for a significant upward move.