As Bitcoin (BTC) teeters on the edge of a significant support/resistance level near $68,000, Ethereum (ETH), the most prominent altcoin, is making waves with its market activity. With a fully diluted valuation standing at approximately $316 billion and an average daily traded volume hitting around $15.1 billion, Ethereum is setting the stage for a potential breakout. The critical resistance level Ethereum is facing is around $2,626, marking a pivotal moment for traders and investors alike.
Over the past week, Ethereum’s price has surged over 9%, inching closer to the upper boundary of a symmetrical triangular consolidation pattern. This movement has sparked speculation about Ethereum’s next move, leading to a significant increase in its Open Interest (OI) as traders prepare for a possible bullish breakout.
Ethereum Whales Are Back
After a period of retreat from the Ethereum market, whale investors are making a notable return. This shift is evident from the substantial cash inflows into the US spot Ether ETFs, with over $62 million flowing in over the past two days, primarily led by BlackRock’s ETHA. Furthermore, the supply of Ether on centralized exchanges has plummeted by nearly 3 million in the past 24 hours, with major exchanges like Binance, Kraken, and OKX taking the lead in this trend.
On the Flipside
It’s crucial to revisit the market dynamics from July, where Ethereum supply was expanding at a rate of approximately 60,000 per month for half a year. However, since the Federal Reserve introduced a 50 basis point rate cut a few weeks ago, the inflation rate has slowed down to about 30,000 to 40,000 per month. If this new pace persists, it could take about three to four months for Ethereum’s supply to revert to pre-merge levels.
According to insightful crypto analyst Benjamin Cowen, the Ethereum market’s outlook is significantly influenced by macroeconomic factors, especially with the Federal Reserve’s impending quantitative easing (QE) program. Cowen emphasized that the monetary policy plays a crucial role in shaping market dynamics, and further rate cuts could potentially escalate demand on the Ethereum network. “Monetary policy affects this stuff more than many of us care to admit. But more rate cuts will likely increase demand on the ETH network,” Cowen observed.
