- Ethereum’s price struggles with increased selling from major institutions and falling network activity.
- Investor focus shifts towards Bitcoin as Ethereum’s ETH/BTC value reaches a five-year low.
- Key developments, such as staking approval, could be pivotal for Ethereum’s potential recovery.
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Ethereum made some recovery earlier in April, but mid-month onward, it struggled at the $1,600 level. The biggest altcoin faces challenges due to big investors selling off and low usage activity, unable to replicate Bitcoin’s positive momentum.
Institutional Selling Puts Pressure
Ethereum’s recent poor price performance is largely due to actions by big investors. Reports revealed that three key entities, including Galaxy Digital), Ethereum Foundation, and Paradigm, transferred 72,100 ETH to exchanges.
These movements suggest that selling pressure might increase among large institutions, causing unease among traders. Additionally, unfavorable on-chain data contributes as another negative factor affecting Ethereum’s value.
At the same time, Ethereum’s network health is showing concerning trends. Transaction fees decreased by 56% over the past week and 88% over the past three months. Net flows from major investors fell by 95% in the recent month.
When big investors move ETH to centralized exchanges and buying interest stays low, short-term bullish potential is weakened.
CME Futures Pressure Ends, New Catalysts Awaited
On a positive note for Ethereum, short positions on CME futures, previously a significant pressure point, have mostly been closed. These large short positions were linked to arbitrage strategies involving spot purchases on ETFs and shorting futures heading into 2025.
While this closure doesn’t directly boost prices, it does reduce downside risk, creating an environment where positive news might encourage upward movement. Some encouraging factors include increased demand for spot ETFs and the Fed possibly cutting interest rates with a more moderate approach.
Internally, the successful launch of Ethereum’s Pectra update and the SEC’s approval of staking activities for ETFs could stimulate demand. These factors may help drive interest in Ethereum.
ETH/BTC Lowest in 5 Years
Crypto investors have boosted their interest in Bitcoin this month, while Ethereum’s decline catches attention. This shift led the ETH/BTC pair to drop to 0.017, its lowest point in five years, indicating a market focus on Bitcoin as confidence in Ethereum wanes.
ETH’s value compared to BTC has been falling since 2022, putting Ethereum’s role as a leading altcoin at risk. Historically, a dropping ETH/BTC ratio often signals broader altcoin market weakness. If this trend persists, it might suggest investors are avoiding risky assets and favoring Bitcoin as a safer choice, highlighting a significant shift in the crypto landscape.
Ethereum’s ability to strengthen against the US Dollar hinges on its performance relative to Bitcoin. If funds entering the crypto market begin shifting towards riskier assets over Bitcoin, Ethereum might experience a rapid dollar-based rise. The ETH/BTC pair serves as a crucial indicator in this context.
Observing the pair’s downward trend over the past year, a move towards the 0.02 level could signal a trend reversal. The nearest resistance is at 0.0186; as long as ETH/BTC stays below this point, pressure on Ethereum is likely to persist.
To reverse the long-term downward trend for Ethereum, key triggers would include the approval of staking. This could boost demand for Ethereum spot ETFs, and the implementation of updates that invigorate layer-2 networks and could improve the altcoins’ appeal.
Ethereum’s Technical Outlook
Ethereum remains in a declining channel that’s persisted for over a year. At the start of the month, buying interest emerged near the channel’s lower boundary, but the recovery stalled around the channel’s midsection, leading to sideways movement.
Currently, $1,650 is the closest resistance level for Ethereum. Short-term exponential moving averages are also acting as dynamic resistance in this area. If Ethereum’s price rises above these averages, it might signal increasing buying interest. Technically, this could lead to a move towards $1,800, aligning with the channel’s upper band. Successfully surpassing $1,800 would be a first step in reversing the trend, potentially propelling Ethereum towards $2,000 and later $2,400.
Conversely, if Ethereum fails to break past $1,650, selling pressure may increase short-term. This could trigger a new downward move, pushing Ethereum below $1,400 and possibly towards the $1,200 range.
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Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation or suggestion to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk belongs to the investor. We also do not provide any investment advisory services.