Ethereum (ETH) Price on the Cusp of Major Rally to $5K despite Low Demand from Institutional Investors

Ethereum remains an undisputed leader in the Web3 space, supporting dozens of layer two chains and hundreds of DeFi protocols.

Key Notes

Ethereum price is currently retesting crucial support levels, which could yield a major bullish recovery in the near term.More than 28 percent of the Ethers circulating supply has been staked to secure the network.

After being trapped in a multi-week correction mode for the past seven months, Ethereum ETH $2 444 24h volatility: 0.3% Market cap: $293.19 B Vol. 24h: $13.41 B price has approached the apex of the consolidation, signaling an inevitable bullish breakout. Since the August crypto selloff, the large-cap altcoin, with a fully diluted valuation of about $292 billion and a daily average traded volume of around $13.4 billion, has successfully rebounded from the 200-weekly Moving Average (MA).

In the daily time frame, Ethereum price against the US dollar has been approaching the apex of a potential symmetrical triangular pattern, signaling a major breakout in the horizon. From a different perspective, Ethereum price has been forming a potential inverted head and shoulder (H&S) pattern in the daily time frame, coupled with bullish divergence on the Relative Strength Index (RSI).

From a technical standpoint, Ether price has been retesting the lower border of a rising macro channel, which began in late 2022. According to several crypto analysts including Ali Martinez, the next wave of the Ethereum price bull run is about to kickstart in the near term.

#Altcoins $ETH next wave of a rally to $5k in the short term is about kick-off. pic.twitter.com/USiGGA55SS

— Mikybull 🐂Crypto (@MikybullCrypto) October 9, 2024

However, Ethereum’s bullish sentiment will be invalidated if the altcoin consistently closes below the established support level of around $2,300 in the near term. In such a scenario, Ether price could drop further below $2K before rebounding in the near future toward its all-time high.

Ethereum Network Registers Heightened Whale Activity

Since the August 5 crypto crash, the supply of Ether on centralized exchanges has increased by more than 250k, worth over $600 million. In the past seven days, around 30K Ether have been deposited in different crypto exchanges led by Coinbase Pro and Bitfinex. The significant Ether inflow to crypto exchanges is largely attributed to the low demand from institutional investors led by the US spot Ether ETFs. On Tuesday, the US spot Ethee ETFs registered a net cash outflow of about $8 million led by Fidelity’s FETH and Bitwise’s ETHW.

Interestingly, none of the US spot Ether ETF issuers registered a net cash inflow on Tuesday. In total, the US spot Ether ETFs have registered a cumulative net cash outflow of about $561 million, with the bleeding expected to continue until the Grayscale’s ETHE stabilized.

Bigger Picture

The Ethereum network has significantly benefited from its staking program, whereby around 28.9 percent of all Ether in circulation has been staked as of this report, up from around 23.8 percent in January 2024.

As a result, the Ethereum network has attracted more web3 developers compared to its competitors including Solana (SOL) in the recent past. As of this report, the Ether network had about $44.5 billion in total value locked (TVL) and over $84.7 billion in stablecoin market cap.

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