Ethereum (ETH) experienced a 1% decline on Wednesday, despite increased buying activity through exchange-traded funds (ETFs) and exchanges. This downturn might be attributed to ETH’s historical pattern of market stagnation during the third quarter, though signs of potential recovery are emerging.
Ethereum ETFs saw a reversal in their recent outflow trend with $11.4 million in inflows on Tuesday, ending a five-day streak of withdrawals. Notable contributions came from BlackRock’s ETHA and Fidelity’s FETH, which saw inflows of $4.3 million and $7.1 million, respectively. This uptick in ETF investments contrasts with Grayscale’s ETHE, which saw no inflows, highlighting its limited impact on the overall net flow performance of ETH ETFs.
Additionally, exchange flows reflect a similar bullish sentiment. Over the past two days, net outflows of more than 177,000 ETH, valued at approximately $416 million, were recorded, according to CryptoQuant. Exchange net flows, representing the cumulative difference between coins entering and leaving exchanges, show that substantial outflows indicate robust buying pressure. The 30-day Simple Moving Average (SMA) of ETH exchange net flows has been on the rise since August, suggesting a stronger buying interest compared to selling.
Despite the positive exchange flow data, ETH whale transactions (those exceeding $1 million) have seen a significant drop recently. Analysts from Santiment suggest that large holders might be positioning themselves for better buying opportunities during market dips or preparing to sell when prices rise. This behavior implies that ETH might have substantial upside potential, as whales are unlikely to sell at current levels.
ETH is currently trading around $2,340, down 1% on the day. Recent trading activity has seen over $42 million in liquidations, with $34.66 million from long positions and $7.72 million from short positions, according to Coinglass. Notably, a long position was liquidated for $11.82 million following a brief drop to $2,278.
Technically, ETH is trading below a descending trendline within a symmetrical triangle on the daily chart. This pattern suggests a potential decline toward the $2,100 to $2,200 range in September before a possible rally. Historical trends show similar declines in previous years—August to November 2022 and July to October 2023—followed by rallies, aligning with ETH’s typical Q3 market behavior.
On the upside, ETH faces significant resistance around the $2,817 level, the upper boundary of a rectangle channel established since August. The descending 50-day Simple Moving Average (SMA) further strengthens this resistance level.
Momentum indicators like the Relative Strength Index (RSI) and Stochastic Oscillator (Stoch) are just below neutral, indicating weakened bullish pressure. A daily close below $2,000 would invalidate the bullish thesis. In the near term, ETH might decline to $2,271 to trigger the liquidation of positions worth $35.44 million.
