Ethereum Drops in Crucial Measure, Slides to Fifth Place
Ethereum’s recent foray into the realm of exchange-traded funds (ETFs) has piqued the curiosity of investors, particularly in Layer 1 protocols. Despite this, Ethereum has slipped to fifth place among the most lucrative fee-generating protocols. The future trajectory of Ethereum’s trading activity may be influenced by the cooling of outflows from Grayscale Ethereum Trust (ETHE).
On Monday, Ethereum experienced a 3% uptick in response to outflows from Ethereum ETFs and the growing focus on Layer 1 blockchain networks. In recent developments, asset manager 21Shares collaborated with Chainlink to incorporate Proof of Reserve into its Core Ethereum ETF. This integration aims to enhance transparency regarding the assets supporting the ETF.
Social data from Santiment indicates a shift in investor attention from meme coins and low-cap tokens towards major Layer 1 protocols such as Ethereum, Bitcoin, and Solana. Notably, Ethereum’s position in the fee-generating protocol ranking has declined to fifth place due to reduced and less expensive transactions on the Mainnet following the Dencun upgrade.
Last week, Ethereum ETFs saw net outflows of $285 million, primarily driven by heightened selling pressure on Grayscale Ethereum Trust, resulting in an outflow exceeding $1 billion. Analysts are closely monitoring the impact of these outflows on the ETH ETF landscape.
In a significant transaction, a large whale deposited 25.8K ETH worth $87 million into Binance, following previous withdrawals totaling 26,721 ETH. The whale’s actions have sparked interest in the market due to the substantial sums involved.
Ethereum’s current trading price hovers around $3,350, reflecting a 3% increase for the day. Despite prevailing bearish sentiment among traders, Ethereum managed to surpass the $3,357 resistance level. The Long/Short Ratio for ETH stands at 0.905, suggesting a tilt towards a bearish outlook. This sentiment is reinforced by the decline in ETH options open interest to $6.09 billion, indicating uncertainty among investors.
Looking ahead, Ethereum’s price movement may mirror that of Bitcoin once outflows from Grayscale subside. There is a possibility of Ethereum attempting to breach the key resistance level at $3,730. In the short term, Ethereum could target $3,413, with liquidation risks for positions valued at $60.21 million.
In conclusion, Ethereum’s performance in the coming days will be closely monitored as it navigates the impact of ETF outflows and market dynamics.
