Ethereum
Ether Reclaims $3,000 on Signs of Seller Exhaustion Ahead of ETF Launch
After falling nearly 20% in the four weeks leading up to July 5, ether (ETH) The market is finally showing signs of seller exhaustion and a potential bullish reversal.
Early Monday, the native token of the Ethereum blockchain rose more than 4% to $3,050, bouncing off crucial support, according to CoinDesk Data.
The rally, coupled with other indicators measuring demand and investment sentiment, suggests that the cryptocurrency may have bottomed out before the imminent debut spot ether ETFs in the US this month.
Let’s discuss it in detail.
Ether is no longer trading at a discount on Nasdaq-listed Coinbase to Binance, a sign of seller exhaustion and a potentially low price.
Blockchain analytics firm CryptoQuant’s Ether Premium Index, which measures the spread between Coinbase’s ETH/USD pair and Binance’s ETH/USDT pair, has rebounded to zero or neutral after a steep discount of -0.19 in late June. The previous discount represented strong selling pressure from U.S. investors.
Similarly, the discount to net asset value (NAV) for the Grayscale Ethereum Trust (ETHE) has quietly evaporated for the first time in more than two years, a sign of increased investor confidence and demand for ether-related investments, according to data source Grayscale and YCharts.
“The discount has narrowed since the bottom of the cryptocurrency bear market in December 2022 and, in particular, more recently with the SEC’s approval of Forms 19b-4 for Ethereum spot ETFs from various issuers on May 23, 2024,” Tagus Capital said in an email.
While issuers must still make their S-1 registration statements effective before trading can begin, the elimination of the NAV discount signals expectations of imminent SEC approval for Ethereum ETF trading, potentially around mid-July,” Tagus Capital added.
ETFs will likely unlock billions of dollars in investor demand for ether and boost awareness of its parent blockchain, Ethereum, which is generally considered more complicated than Bitcoin, according to several observers.
“Analysts have predicted that the potential demand “The ETH ETF is expected to generate inflows of around 30% compared to those recorded during the introduction of the BTC ETF. In the first five months, the BTC ETF recorded $5 billion in net inflows,” IntoTheBlock analysts said in the weekly newsletter.
Price rallies are typical during downtrends, but Ether’s move above $3,000 stands out as it followed a successful defense of the crucial $2,800-2,850 support zone.
Buyers defended these levels during the second half of April and early May, establishing them as crucial support. long tailed Daily candles have appeared at this support since Friday, suggesting that sellers are running out of steam.
A long-tailed candlestick shows that sellers were initially in control, pushing the price down to support, but were eventually dominated by buyers. So it is possible that the rally will continue in the near future.
Another reassuring sign for bulls is the presence of double bottom model on the hourly chart. The pattern found at the end of a downtrend, resembling the letter “W”, indicates a decrease in selling momentum and a potential bullish reversal. The fact that prices have tested and found support at the same level twice suggests that sellers are struggling.