Ethereum Approaches $1,585 Support Level Amid Market Caution

Ethereum (ETH) is approaching a crucial support level around $1,585, a zone that has historically triggered significant bullish reversals. This price range has served as a key indicator during past periods of long-term accumulation, where Ethereum has often seen buyers gradually return when it drops to or below this level.

Currently, Ethereum has fallen below $1,600, indicating a potential cooling phase in the market. However, the asset is moving towards a range that has previously attracted long-term holders. A CryptoQuant contributor highlighted this trend, noting that in every major rally, Ethereum has been near this zone before bouncing back.

If prices continue to decline, Ethereum may test the $1,450 to $1,550 range, which has acted as a floor during several previous corrections. Conversely, if momentum shifts, Ethereum could face resistance around $1,670 and again at the $1,930 level.

Ethereum’s network activity has slowed, with average transaction fees now at their lowest level since 2020, currently at $0.168 per transaction. While this drop in fees is due to reduced congestion, it is not always a bearish signal. Similar fee declines have often occurred near local market bottoms, suggesting a potential reversal.

The fee drop coincides with the effects of Ethereum’s Dencun upgrade in early 2024, which increased scalability through data blobs. However, this has led to a sharp drop in revenue from layer 1 gas fees. Ethereum’s role as the primary value layer has come under pressure, with more users migrating to faster and cheaper layer 2 solutions. As a result, fee generation on the Ethereum base layer has slowed, allowing competing platforms like Solana and BNB Chain to gain market share due to more active usage and lower fees.

Despite this shift, Ethereum continues to lead in terms of network security, with its validator count exceeding 1 million, far surpassing newer chains. Ethereum’s latest decline mirrors growing caution across the crypto space, driven by worries over inflation, interest rates, and global trade tensions. Many traders are waiting for more direction before moving back into the market, keeping Ethereum’s price under pressure for now.

However, if the realized price level holds, Ethereum could again find support, as it has during earlier cycles. Traders and long-term holders continue to monitor the $1,585 zone for signs of stabilization, hoping for a potential bullish reversal in the near future.