Ethereum's February Slump: Investors Accumulate ETH at Lower Prices

Ethereum, the second-largest cryptocurrency by market capitalization, has been experiencing a challenging February, with its price performance being the worst in history. Despite this downturn, the Ethereum Cost Basis Distribution (CBD) metric indicates that investors are accumulating ETH at lower prices instead of exiting their positions entirely. This accumulation trend raises the question of whether ETH can defend the crucial support level of $2,300 and potentially rally to $3,000.

Ethereum's price has dropped by 11% in the past 24 hours, trading at around $2,394. This decline mirrors a broader market pullback, with the total crypto market cap falling by 8% to below $3 trillion. Ethereum saw the second-highest level of liquidations, with $300 million in forced selling, out of which $276 million were long positions. The negative sentiment from the broader market, coupled with the recent Bybit hack and subsequent ETH laundering activities, has contributed to Ethereum's price volatility this week.

The CBD metric shows that the cost basis for new investors buying ETH is dropping, indicating that they are willing to purchase Ethereum at cheaper prices. This trend suggests that investors are accumulating ETH during dips, which could support the price and help it defend key support levels. Historical data shows that traders have bought significant amounts of ETH at specific price points during previous downturns, such as 768K ETH at $2,632 and 1.22M ETH at $3,149. If the downtrend continues, it could mark the beginning of another accumulation phase.

As Ethereum's price retreats, one of the most critical support levels to watch is $2,300. This level has been a significant barrier for the price since February last year. If ETH breaches this support, it could accelerate a downtrend towards the psychological price of $2,000. However, the cost basis drop and historical accumulation trends suggest that the price may hold above this level.

In addition to the $2,300 support, another crucial price level to monitor is the lower trendline of a falling wedge pattern on Ethereum's daily chart. If ETH bounces from the lower trendline and flips resistance at the upper trendline with