- Share
- Twitthis
Institutional ETH inflows have come to a halt, mirroring a pattern preceding significant price drops. But strong retail buying, particularly from U.S. traders, could catapult ETH beyond resistance levels despite the institutional bearishness.
Ether's dilemma: Halted ETF approval vs. retail investors' enthusiasm
Ethereum [ETH] finds itself at a critical juncture.
Institutional ETF Net Inflows have ceased, much like before the March plunge of 30%.
At the same time, American retail traders are amassing aggressively, raising questions: will their enthusiasm break resistance, or will the lack of institutional inflow trigger another sell-off?
Institutional Accumulation-What Comes Next?
An analysis of Exchange Netflow for Ethereum ETFs reveals a distinct pattern in institutional investor behavior.
Typically, slight accumulation over two days signals huge institutional selling to follow.
For instance, between the 18th and 19th of February, this group bought 8,790 ETH only to sell off 146,950 ETH later. Similarly, on the 30th and 31st of March, they accumulated 5,890 ETH, only to offload 28,950 ETH.
Source: CoinGlass
If we disregard this temporary pause in purchasing, they sold a grand total of 100,100 ETH following this period.
The same pattern has resurfaced, with institutions buying just 14,570 ETH in the last two days.
Historically, such moves have resulted in significant price drops: 38.56% during the first instance and 29.30% in the second.
Source: TradingView
If history repeats, ETH appears to be set for another sharp correction. However, the outlook isn't entirely bleak.
Aggressive Retail Accumulation
In the past few days, there has been noticeable ETH accumulation in the market.
U.S. investors, in particular, are leading the charge.
In the last week alone, the Exchange Netflow shows buying has been considerable. These investors have purchased around $380 million worth of ETH, contributing to the ongoing accumulation trend.
Source: IntoTheBlock
Interestingly, the Coinbase Premium Index indicates sustained demand from U.S. investors. The index now reads 0.042 and is climbing, suggesting continued buying.
If this trend continues, with the index moving even higher, then ETH stands a good chance of experiencing a market rally.
On the contrary, the funding market premium presents a different picture, as it continues to hover in the negative region.
With a reading of -0.6, it implies that fund investors are primarily bearish and are currently selling. If this selling pressure escalates, it could exacerbate the existing bearish sentiment, increasing the likelihood of a price fall for the altcoin.
Retail-Driven Bullish Momentum:
Retail activity is evident in Ethereum's massive 24-hour volume of $4.8B on Binance (up from $3.5B the previous day) and a $19.2B peak trading volume across major exchanges on May 4. This surge reflects heightened speculative interest.
Improved market sentiment, driven by social media KOLs and Vitalik Buterin's commentary on ecosystem upgrades, appears to be luring retail buyers back into the ETH markets.
Short-term holder activity also suggests retail accumulation: the 3.92M short-term holders nearing the critical 4M threshold known for fueling rallies.
Institutional Overhang Risks:
A 15% increase in large transactions (>$100k) to $5.3B on May 4 hints at institutional accumulation. But past trends indicate these players often sell into retail-driven rallies to lock in profits.
If ETH's price continues to rise, institutions may look to profit from the retail frenzy, potentially driving down prices.
Take a Survey:Win $500 USDT AERGO'S 30% surge stuns the market - But will profit takers spoil the party?#### Share
- Share
- Twitthis
[1] Binance Trading Volume data from CoinGecko (2022-05-05)[2] Ethereum-holding distribution data from Glassnode (2022-05-05)[3] Year-to-date decline data from CoinMarketCap (2022-05-05)[4] Ethereum market sentiment analysis from The Block (2022-05-05)
- Ethereum [ETH] is at a critical juncture, with institutional ETF Net Inflows ceasing, reminiscent of a pattern preceding significant price drops, such as the 30% plunge in March.
- American retail traders, however, are showing aggressive accumulation, raising questions about whether their enthusiasm will break resistance or cause another sell-off.
- An analysis of Exchange Netflow for Ethereum ETFs reveals a pattern in institutional investor behavior: slight accumulation over two days often signals huge institutional selling to follow.
- For instance, between the 18th and 19th of February, institutions bought 8,790 ETH only to sell off 146,950 ETH later. Similarly, on the 30th and 31st of March, they accumulated 5,890 ETH, only to offload 28,950 ETH.
- In the past few days, there has been noticeable ETH accumulation in the market, with U.S. investors leading the charge. In the last week alone, they have purchased around $380 million worth of ETH.
- Interestingly, the Coinbase Premium Index indicates sustained demand from U.S. investors, with the index reading 0.042 and climbing, suggesting continued buying. If this trend continues, ETH stands a good chance of experiencing a market rally.
