Ethereum (ETH) has faced a considerable pullback in the last two weeks, with concerns around weak demand and decreasing market share taking a toll on its price. The cryptocurrency, after falling to a low of $2,140, managed to rebound to $2,620 as the overall crypto industry showed signs of stability. However, it is important to note that ETH remains approximately 37% below its December high.
New competition in the form of Solana (SOL) has emerged as a significant challenger to Ethereum’s dominance. Data from DeFi Llama reveals that over the last 30 days, Solana’s trading volume far outpaced Ethereum’s, with figures of $264 billion and $95 billion, respectively. Adding to Ethereum’s struggles, it has also been surpassed in terms of collected fees this year, ranking sixth after Tether, Tron, Jito, Solana, and Circle, with a total of $172 million in fees.
The Ethereum Foundation’s ongoing controversies and token dumps have further contributed to the depreciation of ETH’s value. However, several factors suggest that a comeback could be on the horizon.
A potential catalyst for a resurgence in Ethereum’s price is the continued inflow into spot Ethereum ETFs. Data from SoSoValue shows that these funds have experienced cumulative net inflows for six consecutive days, totaling $3.17 billion. This trend signifies that Wall Street investors are “buying the dip,” indicating an increased demand for these funds. However, the spot Ethereum ETFs still have a considerable gap to bridge when compared to Bitcoin (BTC), which has amassed over $40 billion in inflows.
Another factor that could potentially spur a price increase is the decreasing Ethereum balances on exchanges, often an indication of investor accumulation. According to CoinGlass, ETH balances on exchanges have fallen to 15.36 million, down from 16.1 million earlier this year, marking the lowest point since last December. This decline typically coincides with increased Over-The-Counter (OTC) trading activity, a common practice among large institutions looking to execute sizeable transactions outside of public centralized and decentralized exchanges.
The ETH price chart seems to mirror the pattern seen during the August low. After crashing to $2,140 this week, its lowest since last August, the chart has formed a ‘hammer’ pattern, characterized by a longer lower shadow and a small body, often considered a bullish reversal sign. A similar pattern occurred in August when Ethereum bottomed at $2,139, both instances coinciding with significant bearish volume spikes. Given these factors and the fact that ETH found support at the 200-week moving average, a bounce-back seems likely. If successful, Ethereum could potentially retest the resistance at $4,080, with a breakthrough pointing towards further gains to the all-time high of $4,800, and possibly even $6,000.
