Ethereum’s price is facing increasing sell-off risk entering May, as a bearish divergence in on-chain data and a key technical breakdown suggest a potential 20% drop to below $1,850.
"This increases the likelihood of a delayed downward move," CryptoQuant analyst PelinayPA said, referring to the divergence between a falling exchange supply ratio and ETH’s relatively stable price near $2,200.
The Exchange Supply Ratio, which tracks ETH held on trading platforms, has fallen to a level that historically precedes a price bottom. However, the price has not followed suit, creating a gap that past patterns suggest is often resolved by a downward correction. Compounding the bearish outlook, Ether has broken below its 1-Day Bull Market Support Band, a technical level that has consistently acted as a reversal zone in recent months.
A decisive break below the $2,150–$2,200 support corridor could accelerate the sell-off, according to multiple analysts. The next major support area aligns with the 0.786 Fibonacci retracement level, between $1,730 and $1,850, implying a significant decline from current levels if selling pressure persists.
A key warning sign for Ethereum comes from the divergence between its price and the amount of ETH held on exchanges. According to data flagged by CryptoQuant, the Exchange Supply Ratio has dropped sharply, a metric that typically indicates reduced selling pressure and the formation of a price bottom.
The problem is that while the ratio has fallen, ETH’s price has remained elevated around the $2,200 mark. This divergence suggests the market may be artificially supported, possibly by derivatives activity, and has not yet priced in the bearish signal. "Such divergences typically do not last long," PelinayPA noted, highlighting that historical precedent points toward a price drop to close the gap.
Further on-chain analysis from Glassnode shows Ether is trading near the realized price for wallets holding 10,000–100,000 ETH, a key cost basis of approximately $2,228. A sustained break below this level could push large holders into losses, potentially increasing sell pressure.
The bearish on-chain picture is reinforced by a weakening technical structure. Ethereum has lost its footing above the 1-Day Bull Market Support Band, a critical level that has previously marked the bottom of price corrections.
Analyst firm CrypticTrades_ noted that while a quick reclaim of the level is possible, a confirmed breakdown would shift focus to lower support zones. The first key area is around $2,150, a former resistance level.
Failure to hold this support would bring a multi-year trendline into focus, which converges with the 0.786 Fibonacci level in the $1,730–$1,850 range. This technical confluence represents the last major support zone before a much deeper correction could occur, a scenario that would be strengthened if macroeconomic headwinds, such as persistent inflation and geopolitical tension, continue to weigh on risk assets like cryptocurrencies.
This article is for informational purposes only and does not constitute investment advice.
