Ethereum eyes 25% correction in March but ETH price bulls have a silver lining

The price of Ethereum ( $2,226.40 ) ’s native token, Ether (ETH), shows a growing conflict among traders about the market direction for March. This uncertainty has resulted in ETH price consolidating inside a narrow sideways range between $1,600 and $1,700 since Feb. 15.

25% ETH price correction on the table in March

The uncertainty stems from Ethereum ( $2,226.40 ) ’s long-awaited Shanghai upgrade going live some time in March.

Several analysts predict Shanghai’s token unlock feature, which will enable stakers to withdraw their vested tokens from Ethereum ( $2,226.40 ) ’s proof-of-stake smart contract, will trigger a short-term selloff event. 

The Ethereum ( $2,226.40 ) PoS smart contract has attracted more than 17.4 million ETH (~$28.35 billion at the current exchange rate) since its introduction in December 2020, per Etherscan.

In addition, Ether is finding it difficult to break above the technical resistance range. The Ethereum ( $2,226.40 ) token has attempted to flip the $1,650-1,700 area to support multiple times since August 2022, as shown by the red bar in the chart below.

Interestingly, each failed breakout attempt has resulted in a strong pullback toward a common support line — a multi-month ascending trendline (black).

Therefore, if history is any indication, ETH’s next correction could potentially land its price near $1,250, down 25% from the current levels. Conversely, a break above $1,650-1,700 positions ETH for the $1,925-2,000 range (purple) as its next upside target.

Future ETH selloffs will be limited — data trackers

From an on-chain perspective, as extended Ether price crash appears less likely. 

Notably, there’s been a massive drop in ETH supplies on exchanges since September — from around 30% to 11%. Theoretically, this reduces the immediate sell pressure as capital moves to the sidelines.

“The trend in crypto, particularly since September, has been quickly moving self-custody,” Santiment noted, adding:

“This trend picked up after the FTX collapse. Regardless, with both BTC and ETH around 5-year low exchange supplies, future sell-offs will be limited.”

In addition, data analytics firm CryptoQuant has reached a similar conclusion about potential Ether selloffs in the future, primarily in the wake of the Shanghai hard fork.

Related: 3 tips for trading Ethereum ( $2,226.40 ) this year

CryptoQuant notes that 60% of the staked ETH supply — about 10.3 million ETH — is currently at a loss. Meanwhile, Lido DAO, the largest Ethereum ( $2,226.40 ) staking provider, holds 30% of all staked ETH at an average loss of $1,000, or 24%.

“Typically, selling pressure arises when participants have extreme profits, which is not the case for staked ETH currently,” CryptoQuant wrote:

Additionally, the most profitable staked ETH was staked less than a year ago and has not seen significant profit-taking events in the past.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.