Ethereum (ETH) Takes a Hit Amid Mixed Updates: Analysis
Tags: webdev, javascript, web3, blockchain
Published: 2024-06-12 15:04:40

#### Ethereum products see $69 million net inflows, marking best result since March. Analysing why this is not a silver lining for Ether. 

While Ethereum protocol boasts of promising updates, ETH keeps struggling below $3,700. Sharp downtick in social metrics adds advantage for the bears, yet fundamentals spur optimism in Ether’s prospects. But which factors would be leading in the market sentiment? 


## Ethereum Deposits Emptying Despite Positive Address Momentum 

Data from Glassnode indicates that the amount of Ether (ETH) held on exchanges has reached its lowest point in eight years. 

![Ethereum: balance on exchanges (total). Source: Glassnode](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/dqrdtch0maemazmtslcf.png)

While this may indicate a decreased speculative interest in Ether, taking place due to post-ETF approval market shock, this marks a strong holding tendency. According to the IntoTheBlock’s data, 89% of Ethereum holders are in profit at the current price, which is a strong indicator of a healthy market. 

![Ethereum (ETH) trading activity. Source: IntoTheBlock](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/1g65e0ykgq62lzourinl.png)

The data also reveals that Ethereum is mainly held by whales, with 51% of the asset cited to be concentrated on the large holders’ wallets. 

What is more, CoinShares recently reported that Ether investment products saw a total inflow of $69 million for the week, hitting the three-month record.

This correlates with a notable increase in a volume of transactions exceeding $100k, which proves the institutional and large-scale investor optimism on the long-term Ethereum perspectives due to its exchange-traded funds’ (ETFs) approval. 

By contrast, overall Ethereum’s sentiment has registered a sharp decline since the beginning of the month. Santiment’s data reveals that Ether’s weighted sentiment indicates a negative rate after its surge in the end of May – just around the ETF-fueled spike. 

![Ethereum: weighted sentiment and social volume. Source: Santiment](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/6wjh5q8uzop3gf0ha5ne.png)

Additionally, an analysis of the social volume showed downticks corresponding to the decreases in weighted sentiment. 

Despite the weak sentiment, Ethereum still sees a positive new address momentum. At the writing time, the number of new addresses exceeds 105,000.


![Ethereum: number of new addresses. Source: Glassnode](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/t4nvqp5g6nnbz2ada8f9.png)


## Chart Favors Bears

As per Ether’s daily chart, the asset faced heightened selling activity after a short period of consolidation near the $4,000 crucial resistance. This highlights the price level as a key point for short positions. 

Nonetheless, there is a significant support zone ahead, including the 100-day moving average at $3,431.05 and the 0.5 Fibonacci retracement level at $3,419. This suggests that the current price action may continue its bearish retracement in the short term, with the 100-day moving average and the 0.5 Fib level acting as primary support for buyers.

![ETH/USDT 1D chart. Source: WhiteBIT TradingView](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/ngj89wg0uvi714lkvui8.png)

The 4-hour chart indicates a strong sideway movement for Ethereum. According to the graph, the aforementioned consolidation in the $4,000 area has formed a head and shoulders pattern, indicating a lack of bullish momentum and an increase in supply. Consequently, this pattern may signalise an eventual bearish reversal, especially with breaking below the neckline of the formation.

![ETH/USDT 4h chart. Source: WhiteBIT TradingView](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/w1uc94k9hru5zbcc5xzv.png)

The seller dominance is also marked by a bearish divergence between the relative strength index (RSI) and the price movement. 

Currently, the price is at a critical support level of around $3.6K. If sellers manage to breach this pivotal level, continuing the bearish trend is the most likely outcome.


Controversial Ethereum updates only emphasize the vagueness of the coin’s trend. While traders received a perfect opportunity to buy, they should closely monitor the upcoming Federal Reserve’s updates on the interest rates in the US – a crucial factor of influence towards the cryptocurrency market.