Ethereum (ETH) dropped below $1,600 on Monday dropping to $1,530, levels last seen in March. The largest altcoin by market capitalization briefly regained the $1,600 ground on Tuesday before dropping back to the current price at $1,589.

The drop in Ether's price on Monday coincided with a surge in the movement of previously dormant ETH tokens away from old wallets, according to Santiment. The on-chain and social metrics intelligence platform posted the following chart on the social media platform X showing a noticeable increase in the most dormant ETH over three months, according to its Age Consumed on-chain metric.

"A continued dip in mean $ age while prices drop is a capitulation sign, which foreshadows reversals", the post read.

The decline to March levels could attract more buyers, who could take advantage of the dips and buy more ETH at a discount, targeting short-term profits once ETH rebounds toward the $2,000 psychological level. This means Ethereum is building up fresh momentum for a sustained recovery.

Ethereum Could Reach $2,000 in the Short Term

Increased buying from the $1,500 demand zone could push ETH first above $1,600 then to $1,800, and later to $2,000. A sustained break past $2,000 could usher Ethereum into a bull run that could take place between 2024 and 2025.

The RSI is pointing upwards and moving away from the oversold region. This suggested that the buyers had begun returning to the scene.

ETH/USD Daily Chart

Upholding support at $1,600 could help ease the potential selling pressure that has continued to build up after the confirmation of a death cross pattern. This bearish signal occurred on September 1 when the short-term moving average, the 50-day SMA (yellow) crossed below a long-term 200-day sMA (purple).

The death cross adds credence to the bearish outlook, implying that sellers have the upper hand and the ongoing downtrend is far from over.

Unless investors put the fear of uncertainty aside and rally behind Ethereum, the RSI will drop back into the oversold region, which will validate another sell-off to $1,450.

Note that the longer the price stays below the $1,600 level, the higher the chances of another sell-off trimming gains and forcing investors to capitulate.

Analysts believe it is too early to rule out a potential drop to $1,000 – a level that would appear justified based on the revenue projection from the Ethereum ecosystem.