Ethereum’s price appears to be under the influence of current market sentiment again, despite a relatively positive week. On Wednesday September 6, Ark Invest organizes submitted for the first Ethereum spot exchange-traded fund (ETF) in the United States.
This ETF application had a modest impact on Ether’s price, with the cryptocurrency only rising to $1,650 the next day. Furthermore, the token has almost completely reversed the small gains from significant development.
Ethereum price registers a 0.1% increase last week – here’s why
Ethereum is currently changing hands at around $1,628, according to data from CoinGecko. A negligible price increase of 0.1% in the past seven days underlines the struggling market performance of the second largest cryptocurrency.
A spot ETH exchange-traded fund is an investment vehicle that tracks the price of Ethereum on the spot market, allowing investors to buy and sell the crypto asset through a brokerage account. Such a product is expected to drive interest and investment in the Ether token.
Nevertheless, ETH’s price has remained relatively stagnant this week despite the optimistic news. a recent report by blockchain analytics firm IntoTheBlock has provided insight into why the news had little impact on Ethereum’s price.
‘Supply and demand balance’
According to the data analytics platform, the current balance between supply and demand is one of the main reasons why the ETH price continues to move sideways. “Large holdings are concentrated close to the current price of ETH, consolidating prices within a tight range,” IntoTheBlock said.
Source: IntoTheBlock
Data from IntoTheBlock shows that a total of 5.1 million ETH was purchased below $1,600 to create support, while a total of 6.5 million ETH was purchased at a price above this level to create resistance. The blockchain analytics company concluded that traders agree to trade within a narrow range with a large concentration of ETH positions.
‘Automated buying, discretionary selling’
Furthermore, IntoTheBlock believes that while bullish traders appeared to have bought the news, ‘discretionary sellers’ caught up with the story not long after.
“A key factor behind the discretionary sale is likely FTX’s impending liquidation of a reported $3 billion in crypto holdings,” the report said.
While FTX has not yet announced when it plans to carry out these liquidations, it is likely soon recent activity on the exchange’s portfolios alarmed the market.
This sentiment also seems to be reflected in SOL’s performance after global payments giant VISA announced that it will use the Solana network for payment settlements. While the value of SOL rose by more than 5% to trade above $20 immediately after the announcement, the cryptocurrency is trading below $19.5 again.
Since the Ethereum and Solana tokens make up a significant portion of FTX’s assets, it is likely that the sluggish market performance of these assets is due to traders being cautious due to the impending liquidation.
ETH price continues to move sideways on the daily timeframe | Source: ETHUSDT chart on TradingView
Featured image from Unsplash, chart from TradingView