The price of Ether has fallen this week and several data points are starting to suggest that further declines may be in the offing.

July 24 Ether (ETH(BTC) negative price action, as there was uncertainty over macroeconomic conditions and the potential sale of whales.

Several on-chain and technical indicators point to further declines in ETH prices. However, the extent of this downward move could be limited considering the profit levels of existing holders and the decline in liquid ETH reserves.

ETH on-chain analysis suggests another downside

As of early 2023, the Ethereum Network Value to Transaction Value (NVT) metric indicated that the asset may have been overpriced.

Glassnode’s NVT signal measures the relative value of the Ethereum network by comparing the market price to the transaction volume on the chain. A higher NVT value indicates that ETH could be trading at a premium.

Glassnode’s NVT chart reveals that the metric typically fluctuates between 30 and 80. However, it jumped to a three-year high of 120 in early 2023 and has maintained higher levels ever since. This suggests that either a decrease in price or an increase in Ethereum activity on the chain would be required to trigger a reset of this metric.

However, profit levels for short and long holders suggest that the downside could be limited.

Negative Ether price action usually reverses when the Net Unrealized Profit/Loss (NUPL) metric of short-term holders is negative, meaning short-term holders are at a loss. This causes some weak hands to panic sell, allowing buyers to pick up coins at a lower price.

Currently, the short-term NUPL ratio is close to neutral values. However, there is room for some downside based on historical levels.

The realized profit/loss metric, which assesses the relative profitability of ETH transfers, paints a similar picture. On-chain analytics company Santiment he wrote in its latest analysis that “the on-chain transaction volume to profit/loss ratio still favors revenue”, but not by much.

Santiment analyst Brian Quinlivan added:

“If ETH drops a bit more from here and threatens the $1,700-$1,800 level again, panic selling will wash out to justify buying.”

Similarly, the NUPL ratio for long-term holders is also hovering near 2019 and early 2020 highs, suggesting a pullback is likely.

ETH feed on shifts dropped drastically because Shapelly upgrade in April. At the same time, amount wagered for verification the proof-of-stake network has increased. Locked ETH in staking contracts have reduced their liquidity reserves on exchanges, which are more prone to selling than staked ETH.

The ETH realized price, which represents the real value of the token based on the daily value moved on-chain, is currently $1,507. In 2022, ETH quickly recovered below the realized price metric as long-term holders’ profit levels fell into the negative.

On-chain metrics show that the price could suffer some selling pressure from short-holders and panic selling by investors spooked by relatively lower activity levels in 2023.

However, the profit levels of short and long holders suggest that the decline may not extend far enough and the price could find support above the $1,500 level.

Related: Crypto investors are cooling off on Bitcoin funds and turning to Ether and XRP

ETH/USD Price Analysis

Technically, the ETH/USD pair shows short-term bearish risk with a death cross imminent on the weekly scale.

Ether has previously witnessed only one death cross between the 50- and 200-period moving averages (MA) on a weekly basis in June 2019, after which its price fell by 60%.

On the daily chart, the ETH/USD pair threatens to fall towards the 200-day MA at $1,761, which also coincides with the lower November 2022 highs.

Derivatives data for ETH indicates that there has been no significant change in the volume of open interest in futures contracts, reflecting demand for these contracts. This suggests that traders are currently not showing much interest in the recent lackluster price action.

A look at options data from Deribit reveals that $1.1 billion worth of contracts will expire on July 28. The position in the options market suggests an uptrend with a notable concentration of call options between $1,900 and $2,400.

As the expiration date approaches, the price is likely to remain muted around the maximum pain level for option buyers, which is $1,850.

Based on on-chain and market indicators, it appears that Ether’s negative selling pressure could continue for several weeks. However, there is potential for a strong influx of buyers, especially at the $1,700 and $1,500 support levels.