Ethereum has experienced a significant price drop of approximately 15% from the highs of March 2024. This downward pressure has erased all the gains that were achieved from May 20. Despite this bearish trend, on-chain data suggests that there is a positive outlook for Ethereum. An analyst highlighted a surge in ETH demand, particularly from permanent holders. These long-term holders are most likely institutional investors with substantial capital at their disposal. Unlike retail investors, institutions have the luxury of holding onto their assets for longer periods and are not easily swayed by market volatility.
According to CryptoQuant data, these permanent holders have been actively buying ETH, with records showing the second-highest daily purchase being made on June 12. The significant purchase of 298,000 ETH on that day indicates a strong bullish sentiment among institutional investors. This buying activity is only slightly below the all-time high of 317,000 ETH purchased on September 11, 2023. The influx of ETH into institutional wallets suggests that hedge funds and billionaires are starting to position themselves in the market and taking advantage of the lower prices.
Despite the positive demand indicators, the Ethereum market currently shows weakness, as evidenced by the daily chart. The failure of bulls to completely reverse losses from June 11 and the subsequent dip on June 13 indicate that sellers are back in control. The price action in the daily chart also reveals $3,700 as a strong resistance level for Ethereum. Since the breakout on June 7, ETH has been on a downward trajectory, filling the gap from May 20.
If the current downtrend continues, it is possible that Ethereum will re-test the $3,300 support level, even amidst the positive sentiment in the broader cryptocurrency market. The uncertainty surrounding Ethereum’s price recovery or potential further decline remains to be seen. In spite of the market weakness, there is a sense of optimism from key figures like Gary Gensler, the chair of the SEC. Gensler’s comments on the potential approval of a spot Ethereum ETF in the coming months could provide a significant liquidity boost for ETH. Institutions, similar to Bitcoin ETFs, are likely to inject billions into Ethereum, offering their clients exposure to the digital asset.
While Ethereum is currently facing downward pressure and struggling to maintain bullish momentum, the surge in demand from institutional investors signals a positive long-term outlook for the cryptocurrency. The market dynamics, institutional interest, and regulatory developments are all factors to watch closely as Ethereum navigates through the challenging price environment.
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