Ethereum’s Bearish Trend: Current Market Sentiment and Future Prospects
After facing prolonged low demand from institutional investors, Ethereum (ETH) continued to experience bearish sentiment last week. This leading altcoin recorded its lowest weekly close since early February, settling around $2,294. However, this bearish momentum is expected to wane significantly in the near term as Ethereum approaches the August 5 lows.
Moreover, the anticipated economic shift in the United States, particularly with the upcoming general elections, is likely to increase cryptocurrency liquidity in the months ahead. Additionally, Bitcoin’s dominance is nearing a macro reversal, which is expected to accelerate the rotation of crypto capital into altcoins.
Ethereum Whales’ Reduced Appetite
According to on-chain data analysis provided by Glassnode, Ethereum whales have significantly reduced their accumulation rate since early July, opting instead to take profits. For instance, US-based spot Ether ETFs have only recorded one weekly net cash inflow since the historic approval in July. In total, US spot Ether ETFs, led by Grayscale’s ETHE, have registered a net cash outflow of approximately $568 million. Meanwhile, on-chain data indicates that more Ether whales have accelerated their selling pressure, even at a loss.
Rising Network Activity
Despite the prevailing bearish sentiment, the Ethereum ecosystem has exhibited substantial growth recently. According to on-chain data analysis conducted by Santiment, the Ethereum ecosystem reached a four-month peak in network growth, suggesting a potential bullish rebound ahead. On a Sunday, traditionally the least active day of the week, Ethereum saw the creation of over 126,000 new wallets. This surge in network activity underscores the growing utility of the Ethereum network and hints at possible price bounces from the $2,200-$2,300 level.
The Ethereum network is heavily bolstered by its rollups, which facilitate the seamless onboarding of more users in specific niches including gaming and real-world asset tokenization. This surge in network activity is a positive indicator for Ethereum’s long-term growth prospects.
Midterm Price Expectations
From a technical standpoint, Ethereum’s price is likely to retest the support level around $2,163 in the near term before potentially rebounding towards its all-time high. However, if Ethereum consistently closes below the established support rising trendline observed over the past year, we could witness further bearish sentiment in the coming months, potentially pushing the price below $2,000.
As the cryptocurrency market continues to evolve, monitoring these trends and technical indicators will be crucial for investors and traders. Ethereum’s performance in the midterm will depend on various factors including market sentiment, network activity, and broader economic conditions.
