Ether Price Drops, But Indicators Suggest Potential Resurgence Amid Shrinking Exchange Supply
Summary:
Ether (ETH) value sagged 15%, from $4,000 to $3,363, on June 16, with a 4% decrease within the last week. Despite the dip around $3,500, Ether finds support, and multiple metrics suggest an upcoming resurgence. A shrinking supply of the cryptocurrency on exchanges, a rise in ETH futures open interest, and a sign of anticipation for spot Ethereum exchange-traded fund (ETF) launch all contribute to the potential recovery. While a significant increase in Ether's value is anticipated prior to and following the ETFs' introduction, investments and trading moves should be made following comprehensive, independent research.
Ether (ETH), the cryptocurrency ranking second in market capacity, saw its value decline by 15% from $4,000 to $3,363 on June 16, marking a 4% drop over the past week. Current data from Cointelegraph Markets Pro and TradingView suggests ETH is trading around $3,518, which is roughly 14% lower than its multi-year peak of $4,091 achieved on March 12.
Daily trade volume has soared by 43% alongside the drop in Ether's value, reaching a total of $14 billion, suggesting strong selling activity. However, at approximately $3,500, ETH seems to be finding support, with several onchain measurements and technical pointers indicating a potential resurgence.
One momentum propelling ETH's recovery is the shrinking availability of the cryptocurrency on exchanges. CryptoQuant, a provider of onchain data, reports that Ethereum's reserves on exchanges have hit a five-year low at 16.7 million ETH after a 9.3% reduction in the last 90 days.
There has been a significant decrease between the inwards and outwards balance among centralized wallets between May 20 and June 14, as withdrawals began to surge. This comes alongside a 14% boost in ETH's value within the same timeframe. It implies that investors potentially transfer their assets to private wallets, indicating they are not looking to sell and expect a rise in price.
This theory is reinforced by the recent spike in accumulation by large-scale owners. Data from market intelligence company Santiment shows a rise in wallets holding between 10,000 and 100,000 ETH since May 25.
In a post on June 16, trader Ali Martinez shared a chart from Santiment highlighting that "#Ethereum whales have purchased over 700,000 $ETH in the last three weeks, amounting to around $2.45 billion!" This shows that these major owners are not selling but instead continuously accumulating, indicating they expect to see more gains.
A rise in ETH futures open interest (OI) due to increased leverage demand further supports ETH's recovery. Coinglass data shows that the OI rose from $15.06 billion on June 14 to its current $16.15 billion.
From a technical perspective, ETH's recent dip may precede an imminent bullish divergence between its price and the relative strength index (RSI) in the four-hour chart. While the price of Ether dropped and presented lower lows between June 10 and June 14, its daily RSI rose, forming higher lows, indicating dwindling strength in the current downward trend.
Prospects for Ether's value are also likely to be driven upwards by the anticipated launch of the spot Ethereum exchange-traded funds (ETFs). The United States Securities and Exchange Commission (SEC) granted historic permission for spot Ethereum ETF filings on May 23, which resulted in a price surge of more than 12% nearing $4,000.
Market participants are now eagerly awaiting the trading commencement of these spot Ethereum ETFs, with July 2 earmarked as a potential start date by Bloomberg's Senior ETF Analyst, Eric Balchunas.
Despite their approval being granted, the ETFs could not begin trading until they had received the mandatory S-1 registration statement sanctions. With the anticipated launch, market participants are also expecting a significant increase in Ether's price prior to and following the ETFs' introduction.
Please note that this article should not be construed as investment advice or recommendations. All investments and trading moves involve risk, and those considering should independently conduct comprehensive research before deciding.
Published At
6/17/2024 6:18:29 PM
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