Ethereum Price Forecast: ETH could see a decline as on-chain and derivatives data paint bearish picture

Ethereum price today: $3,080

• Ethereum options data show that most investors expect a further downside after purchasing more put contracts.
• Ethereum's rising transaction volume and staking outflows point to a potential increase in selling pressure on the top altcoin.
• ETH struggles near the 14-day EMA support amid confirmation of an inverted head and shoulders pattern.

Ethereum (ETH) declined below $3,100 on Tuesday as market sentiment surrounding the top altcoin is turning bearish. On-chain data reveals that investors are potentially withdrawing and putting sell pressure on exchanges.

Ethereum's on-chain and derivatives data indicate further price decline

According to crypto options exchange Derive CEO Nick Forster, market sentiment surrounding Ethereum has been gradually flipping bearish following its recent price consolidation.

"Ethereum is showing signs of a more negative sentiment brewing, with more calls being sold (27%) and puts bought (34.8%) in comparison to Bitcoin," he wrote in a report to investors.

Call and put contracts are derivatives instruments that options traders use to predict the price movement of an underlying asset. Calls signify a bet that ETH's price will rise and vice versa for puts.

Investors also expect ETH to see increased volatility in the coming days, with options traders anticipating a 68% chance of a move between -19.18% ($2,510) and 23.73% ($3,843), according to Derive data.

Ethereum's large transaction volume also paints a similar picture, increasing from 1.66 million ETH on Sunday to over 2.95 million ETH on Monday, per IntoTheBlock's data.

ETH Large Transaction Volume | IntoTheBlock

However, the rising transaction volume may be tilted toward the downside as ETH staking net flows in the past five days show net outflows of 188K ETH worth over $580 million. This indicates that most investors are withdrawing their staked tokens to sell them on exchanges potentially.

ETH Staking Flows | IntoTheBlock

Meanwhile, Ethereum exchange-traded funds (ETFs) recorded net outflows of $39.1 million on Monday, per Coinglass data.

Ethereum Price Forecast: ETH struggles near EMA support amid inverted head and shoulders pattern

Ethereum is down over 2% following $35.88 million in ETH futures liquidations in the past 24 hours. Liquidated long and short positions accounted for $25.32 million and $10.36 million, respectively.

The 14-day Exponential Moving Average (EMA) continues to defend ETH near the $3,000 psychological level following its consolidation in the past few days. This move has validated an inverted head and shoulders pattern on the daily chart for the top altcoin.

ETH/USDT daily chart

As a result, if ETH overcomes the resistance near $3,400, it could rally over 30% to $4,522. However, ETH has to overcome the $3,732 and $4,093 hurdles to complete such a move.

The Relative Strength Index (RSI) is above the neutral level and trending downwards after seeing a rejection near its yellow moving average line. This indicates that bullish momentum is steadily weakening.

A daily candlestick close below $2,817 will invalidate the thesis and send ETH toward the support level near $2,250.