After attempting a breakout a few days ago, Ethereum was rejected at $3.4k and fell to a local low of $3045.
At the time of writing, Ethereum [ETH] traded at $3,118, after a slight increase of 0.03% on the daily charts and a rise of 2.5% on the weekly charts. Amid this market pullback, investors took the opportunity to accumulate at a discount.
Whale rotates, exchanging 1969 BTC for 58,149 ETH
With crypto in a prolonged downtrend, significant capital has shifted from Bitcoin to other crypto assets.
In fact, the capital moved to Bitcoin [BTC] has fallen from a peak of $62 billion in July to just $4 billion.
Amid this shift, Ethereum is the biggest beneficiary with investors, especially whales, selling BTC and accumulating ETH.
Source: Checkonchain
Monitors on the chain observed such a whale. According to Look at chaina whale traded another 502.8 BTC for 14,500 ETH, worth approximately $45.24 million.
This whale has been aggressively trading BTC for ETH in recent days. As a result, the whale converted 1,969 BTC, worth $177.9 million, into 58,149 ETH, worth $181.4 million.
When whales switch from BTC to ETH, it indicates a high risk appetite, indicating that they are willing to take on more risk for higher future returns.
Such market behavior indicates confidence in ETH and an expected strengthening of the narratives.
Demand for ETH is recovering
With Ethereum seeing a shift in market sentiment, demand for the altcoin has increased significantly.
To this extent, Ethereum’s Fund Market Premium has remained positive for two consecutive days, for the first time in almost two weeks.
Source: CryptoQuant
If the market premium remains positive, it generally indicates that investors have turned to aggressive accumulation of ETH through funds.
So buyers are willing to pay more than the actual value of ETH, a clear sign of institutional bullishness.
As a result of this aggressive accumulation, Ethereum’s Exchange Netflow has remained negative for five consecutive days.
In fact, at the time of writing, the altcoin’s Netflow was -32k ETH, indicating withdrawals rather than deposits, a clear sign of aggressive spot accumulation.
Source: CryptoQuant
Historically, greater foreign exchange outflows have accelerated upward momentum by increasing scarcity, often a prelude to higher prices.
Is demand enough to support a recovery?
Although demand for ETH from whales and funds has recovered, the market remains structurally bearish. As a result, demand has become insufficient to fill the market gap.
In fact, Ethereum’s downward momentum has continued to strengthen. The Directional Movement Index (DMI) fell into oversold territory, entering a negative zone at -3, indicating bearish dominance.
Source: TradingView
Such market conditions leave ETH in a bearish position and could lead to further losses. Continuation of these market conditions could see ETH lose $3k support and drop to $2.8k.
However, if buyers continue the accumulation, ETH could close above the EMA20 at $3121 and target $EMA50 at $3288, signaling a trend shift.