Ethereum price is in a delicate stage now after a heavy selloff that was initiated by the whales triggered the selloff that saw it dip. Reportedly, After a 4% loss within a single day, it is currently at $3,683 per coin, which is low for the week and 6% lower than its value a week ago. Nevertheless, Ethereum has also raised 17% monthly at this time.
Crypto news sources show that on December 18, ethanol whales with 1,000-10,000 eth sold 60,000 eths worth $200 million+. Such a decline in holdings has strengthened the bearish pressure within the market, as CryptoQuant showed that the influx of positive netflows to exchanges has hit a weekly high.
Whale Activity and Increasing Exchange Inflows As Bearish Pressure
The latest selloff, however, reveals the impact of Ethereum whales, who hold 57% of the altcoin’s circulating supply. As per IntoTheBlock, the scale of the sell-off is evident, through their holdings of ETH, which has decreased from 13.47 million to 13.41 million.
This selling activity also coincided with increase in inflow of the spot exchange rate. It also subjected the sell-side to higher pressure, as positive net flows to exchanges risen to a weekly high. A spokesman for CryptoQuant has stated that “The onset of increased selling pressure led to a drastic change in the price from $3,900 down to $3,500.”
With the proceeds from the selling increasing, long and short liquidations for Ethereum price hit $124 million and $108 million respectively. Analysts have claimed that purchasing momentum must rise to prevent ETH from retesting bears in the following weeks.
Institutional Demand for Ethereum Shows Mixed Signals
Although institutional demand has been cited as a factor behind Ethereum price surging past $4,000 earlier this month, there are signs of slowing down. In reference to information from the SoSoValue, net purchases of Ethereum-focused spot ETFs’ were at $2.45 million on December 18th, bringing average rates to the lowest level in November.
Furthermore, the Grayscale Ethereum Mini Trust experienced a net redemption of $15 million – the first time it has witnessed redemptions since November. “There has been great institutional interest, but these numbers mark a period of slowing down,” SoSoValue’s analyst said.
However, we should not lose sight of the general trajectory as inflows to ETFs have gradually increased consecutively over the past 18 days. If this trend continues, then Ethereum can get back to its bullish phase and come out of its present bearish trend.
Ethereum’s Key Supply Zone and Derivatives Market Analysis
However, the next test for Ethereum price is located at $3,800-$3,900 — this is a crucial supply area. Using data obtained from IntoTheBlock, 2,590,000 addresses for example, purchased 4,850,000 ETH at these prices. This level might potentially act as a support level, because if Ethereum reaches it, some traders are likely to start taking profits.
The speculative trend continues within the derivatives market even though open interest has reduced by 4%. According to Coinglass, trading volumes have increased by 30%, and Ethereum’s open interest of $27 billion is only 6% below its all-time high.
Notably, the long/short ratio is $0.91, indicating that the majority of those trading in derivatives are bearish. If gold fails to get past the supply zone, bear pressure persists in Ethereum.
Conclusion: What’s Next for Ethereum Price?
Finally, the recent Ethereum selloff demonstrates how tremendous the problem of managing high volatility really is. Whales are also selling ETH worth $200 million, while exchange inflow has also been on the rise – another sign of a bearish trend. Nevertheless, continuing institutional demand and trading activity could form a basis for the recovery of the derivatives market.
However, as Ethereum climbs towards the $3,800-$3,900 supply level, traders and investors must focus on whether buyers are returning to the market to drive out sellers. Should prices break out beyond this level, more chances of a push higher opens up, but any failure to do this might lead to more bearish action. Keep following The Bit Journal for the latest crypto updates on Ethereum price.
FAQs
Why did the recent Ethereum price decrease?
Whales’ large sell volume combined with an influx of positive net inflows to exchanges has placed more selling pressure on Ethereum, which led to cutting its price to $3,683.
Why can’t the Ethereum price break below its key supply zone?
There is the crucial support level at $3,800 -$3,900, where 2,590,000 of Ethereum addresses bought 4,850,000 ETH.
What has happened to the demand for Ethereum prices from institutions?
If institutional demand had been steadily increasing, fresh numbers point C: Lower flows into ETFs and $15 million outflows from the Grayscale Ethereum Mini Trust.
What can be predicted from exchange inflows?
Higher exchange inflows reflect higher selling pressure on Ethereum, and if not met by buying pressure, it could drag Ethereum’s price down.
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