Ethereum has plunged below $1,700 over the past day. Here is the on-chain indicator that may have signaled this drop in advance.
Ethereum Age Consumed Metric Spikes Before Price Crash
According to data from the on-chain analysis firm Holy, institutional investors seem to have been waiting for the move to happen. The indicator of interest here is the “ETH age consumed”, which first finds the total number of coins moving on the Ethereum blockchain. Then multiply this value by the days these coins were inactive before their move.
So this way the metric keeps track of how many coins are sold/moved each day and uses their age as a weighting factor. This means that many old coins are moved to the network whenever the value of this indicator is high.
Naturally, low metric values, on the other hand, would imply that there are not many coins moving on-chain at the moment or that some coins with a low average age are being transferred.
Now here is a graph showing the trend in the age of Ethereum consumed over the last month:
Looks like the value of the metric has been quite high in recent days | Source: Santiment on Twitter
As shown in the chart above, Ethereum’s age consumption metric had recently registered a very large spike. This would suggest the potential movement of many on-chain dormant coins during this surge.
Generally, when you see such large spikes in the indicator, it is a sell signal by long-term (LTH) holders. The LTH cohort includes all investors holding their coins for more than 155 days.
These headlines are experienced hands in the market who don’t sell easily even when the market is rough. For this reason, their moves may be something to watch out for, as when they do sell, it is generally not a positive signal for price.
The chart shows that LTH had shown a lot of movement earlier in the month as well. Shortly after these investors kicked in, the price of the cryptocurrency plummeted.
This time, the peak in the age of Ethereum consumed also appears to have preceded a price crash, as the value of the cryptocurrency has now dipped below the $1,700 level.
This latest price drop came on the heels of news that the US Federal Reserve is not raising interest rates this time, but more hikes to combat inflation are coming later in the year.
Santiment suggests that the increase in the consumed age metric before the price drop could imply that institutions were already expecting the move, so they switched their currencies ahead of time.
ETH price
As of this writing, Ethereum is trading around $1,600, down 11% over the past week.
ETH has taken a plunge recently | Source: ETHUSD on TradingView
Featured image from iStock.com, Charts from TradingView.com, Santiment.net
