Despite a hint of Bullishness ETH Remains Neutral
BlackRock has overtaken the Ethereum Foundation in terms of ETH holdings.
The Ethereum market is generally neutral although with a bullish cue.
A drop in open interest and funding rate shows a potential bullish ETH future.
Uncertainty and panic is still evident in the market as prices of most cryptocurrencies remain depressed. Ethereum is an example of a crypto asset that has been gaining ground slowly though. Now, the bulls seem to face pressure as ETH is getting closer to a key resistance level at $2,666.43. For the 24-hour period that stretched from 17 to 18 August it gained by 1.26% to close the day at $2,654.
ETH’s gradual price comes at a time when several institutional investors are putting their funds in pioneering assets that include bitcoin and ETH. For example, BlackRock has just overtaken the Ethereum Foundation in terms of ETH holdings. By the look of things, BlackRock aspires to acquire more ETH which is good news for the Ethereum market. For instance, by the end of the second quarter of the year, BlackRock held 308,000 ETH. The asset management giant continues to acquire the largest altcoin due to the inspiring performance of its exchange traded product, BlackRock’s Ethereum ETF (ETHA), with a valuation of about $1 billion.
By mid- August, BlackRock’s ETHA had added assets worth over $977 million. Therefore, by comparison it was the only product in that category valued at over $500 million. The addition of both Ethereum and bitcoin to its portfolio this year makes it one of the most influential financial firms investing in decentralized assets such as cryptocurrencies.
The market is hopeful that there will be a sustained capital inflow into the ethereum market through both direct and indirect means. In a direct way we expect more large-scale investors to acquire ETH. On the other hand, some institutional investors will likely invest in spot Ethereum ETFs.
Whereas ETH has maintained a fairly stable value and attracted new investment some experts are questioning the lower than expected activity on the network. Due to such a development the Ethereum gas has dropped to a 5-year low. According to some analysts the drop in ETH fees, if accompanied by the Federal Reserve interest rate cut, would make the fourth quarter another fruitful season for cryptocurrencies.
Whale Movements a Source of Concern
Despite what is looking to be a promising second half of the year for Ethereum, whale activity is a source of concern to ETH maximalists. As per Santiment data there has been a drop of ETH transactions valued at $100,000. Such transactions decreased from 5,371 on 12 August to 4,346 on the 17th of the same month. Despite the drop in whale activity there are several signs that Ethereum is heading towards a bullish period.
First, data on Santiment shows that there had been a huge decrease in Ethereum open interest from $5.28 billion on 12 August to $5.05 billion on 18 August. In a normal case a drop in open interest indicates a possibility of a decline in market volatility. The following graph shows changes in Ethereum open interest, funding rate and whale activity.
The data also shows that the total funding rate aggregated by Ethereum dropped below the zero market for the first time since October 2023. At the time of writing it is standing at negative (-) 0.0002%. Nonetheless, there are mixed indications in the direction the ETH price may move within the next few days and weeks. For example the moving average analysis shows that the 200-day SMA may drop below the 50-day SMA by mid-September.
Also, the relative strength index (RSI) is neutral since it has a reading of 39.95. Generally, the lower SMAs that include SMA3, SMA5 and SMA10 are bullish. However, the higher SMAs such as SMA21, SMA50, SMA100 and SMA200 are bearish.
A wide range of other technical indicators are showing a neutral market outlook. These include stochastic Fast (14), Commodity Channel Index (20), Average Directional Index (14), Awesome Oscillator (5, 34), MACD (12, 26), Williams Percent Range (14), Ultimate Oscillator (7, 14, 28), VWMA (10) and Ichimoku Cloud B/L (9, 26, 52, 26).
Conclusion
Technically, Ethereum looks very volatile since it is fluctuating around the $2,750 ETH/USDT resistance level. However, in reality the market is quiet as the next graph shows.
As the graph shows, since 5 August Ethereum has been moving sideways. What this indicates is that there is a possibility that its price may rise or fall further. Also, during that period there are very small bars which shows that volatility is very low. In all, the current Ethereum performance is in line with how the rest of the crypto market is performing.
Author: Mashell C., Gate.io Researcher
This article represents only the views of the researcher and does not constitute any investment suggestions.
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