Ethereum Drops 5% Amidst Market Correction, Long-Term Holders Unfazed

Ethereum, the second-largest cryptocurrency by market capitalization, experienced a significant decline on Tuesday, dropping to $3,101.83 and marking a more than 5% decrease in the past 24 hours. This dip comes amidst a broader market correction, with the global cryptocurrency market cap falling by over 5% in the same period.

Despite the recent price drop, Ethereum's long-term holder confidence remains strong. According to data from IntoTheBlock, the average holding time for Ethereum is currently 2.4 years. The Long Term Holder NUPL (Net Unrealized Profit/Loss) chart indicates that long-term holders are in a state of moderate profit-taking, reflecting their belief in Ethereum's long-term potential. However, network activity has been on a decline lately, with daily transactions dropping to approximately 61.2 million, a significant decrease from its peak of nearly 80 million transactions.

The rise of Layer 2 solutions like Arbitrum and Optimism, as well as alternative Layer 1 blockchains like Solana and Avalanche, is putting pressure on Ethereum's dominance. These platforms are addressing Ethereum's scalability issues but also diverting activity away from the mainnet, fragmenting the ecosystem. Ethereum must continue to innovate to retain its position as the leading smart contract platform.

At press time, Ethereum's price was maintaining its position above critical moving averages, with the 50-day MA at 3,395.62 and 200-day MA at 2,986.20. The trading volume was steady at 27.97K ETH daily, indicating persistent institutional interest despite operational challenges. The recent formation of lower highs after testing $4,000 hints at potential distribution at higher levels, despite strong support being found at the 200-day MA.

The divergence between strong holder metrics and declining network activity creates an intriguing dynamic for Ethereum's future. While immediate network usage statistics might concern short-term traders, the unwavering confidence of long-term holders points to a deeper understanding of Ethereum's evolving role in the cryptocurrency ecosystem. The key support level at $2,986 and resistance around $3,600 define Ethereum's immediate trading range right now, with holder behavior suggesting limited downside risks despite operational