Ethereum is currently facing downward pressure in the market, with a significant drop of approximately 15% from its peak in March 2024. This decline has erased all the gains that were made since May 20. Despite this bearish trend, on-chain data is pointing towards a more optimistic outlook for Ethereum. Analysts have noted a notable increase in the demand for ETH, specifically from permanent holders. These permanent holders are often institutional investors with substantial financial resources, enabling them to hold onto their investments for longer periods without being swayed by market volatility.
According to data from CryptoQuant, these permanent holders have been actively purchasing ETH, with records showing the second-highest daily purchase of 298,000 ETH on June 12. This buying activity is just shy of the all-time high of 317,000 ETH that was purchased on September 11, 2023. The surge in demand from institutional investors is a positive sign amidst the current market conditions, indicating a strong bullish sentiment. It suggests that hedge funds or billionaires are starting to establish positions in the market by taking advantage of the lower prices.
Despite the bullish demand from institutional investors, Ethereum is currently displaying weakness in the daily chart. The bounce on June 12 was not sufficient to completely reverse the losses from June 11. The subsequent dip on June 13 has brought sellers back into the equation, potentially driving prices towards the levels seen on June 11. The daily chart also indicates that $3,700 is emerging as a resistance level for Ethereum, with prices falling and filling the gap from May 20. If this downward trend continues, there is a possibility that ETH may re-test the $3,300 support level.
The market outlook for Ethereum remains uncertain, with the possibility of prices either recovering from current levels or slipping towards $3,300. Despite the cautious sentiment, there is overall optimism in the market, as evidenced by comments from Gary Gensler, the chair of the United States Securities and Exchange Commission (SEC). Gensler has hinted at the potential approval of a spot Ethereum exchange-traded fund (ETF) in the summer, which could significantly boost liquidity for ETH. BlackRock has already resubmitted its S-1 filing and is awaiting approval, with the expectation that institutional investors will allocate significant funds to ETH through ETFs.
While Ethereum is currently facing downward pressure in the market, the demand from permanent holders, especially institutional investors, suggests a strong bullish sentiment for the future. The potential approval of a spot ETH ETF could further enhance liquidity and institutional participation in the market, contributing to a positive long-term outlook for Ethereum.
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