Ether (ETH) fell 15% from $4,000 before falling to a low of $3,363 on June 16. The second-largest cryptocurrency by market capitalization has fallen 4% over the past seven days.
According to data from Cointelegraph Markets Pro and TradingView, the price of Ethereum is around $3,518, about 14% below the multi-year high of $4,091 set on March 12.
The drop in Ether has intensified high selling activity, with daily trading volume increasing 43% and now reaching $14 billion.
Despite this bleak outlook, ETH appears to have found support at the $3,500 level, and several technical and on-chain indicators point to Ether’s upside potential.
Reduction in exchange supply
One factor supporting Ether’s upward trend is reducing supply on exchanges. Ethereum balances on exchanges reached a five-year low of 16.7 million ETH after falling 9.3% over the past 90 days, according to on-chain data provider CryptoQuant.
The total balance between inflows and outflows from centralized exchange wallets shows a sharp decline between May 20 and June 14, when withdrawals from trading platforms began to surge. This decline is accompanied by a 14% rise in the price of Ethereum over the same period.
A decrease in ETH supply on exchanges simply means that investors can withdraw tokens to their self-custodial wallets, indicating that they are not willing to sell in anticipation of future price increases.
This is explained by the surge in accumulation of large holders over the past few weeks. Additional data from market intelligence firm Santiment shows an increase in wallets holding between 10,000 and 100,000 ETH since May 25.
In a June 16 post on X, popular trader Ali Martinez shared a Santiment chart, saying:
“Ethereum whales have purchased over 700,000 ETH over the past three weeks, for a total value of approximately $2.45 billion!”
This means that whales did not sell when ETH recently rose to $4,000, thanks to the approval of a spot Ether exchange-traded fund (ETF) in the United States. Instead, they have continued to accumulate, which suggests that most want to position themselves for more profits.
Ether’s surge in open interest supports ETH’s rise
The increased demand for leverage has led to a surge in ETH futures open interest (OI), increasing from $15.06 billion on June 14 to a current value of approximately $16.15 billion.
Ether futures OI fell below this level on April 14 before recovering to over $12 billion on May 21, according to data from CoinGlass. From there, tOI surged nearly 36% in less than 30 days, suggesting increased demand for leveraged ETH positions.
Ethereum’s on-chain and derivatives markets reflect investor optimism and expectations for the launch of a spot Ether ETF in the coming weeks.
From a technical perspective, ETH’s recent decline preceded a four-hour period of growing bullish differential between its price and the Relative Strength Index (RSI).
The price of Ether fell between June 10 and June 14, forming lower lows. However, during the same period, the daily RSI rose and made higher lows.
In technical analysis, a bullish difference between falling prices and rising RSI signals a weakening of the prevailing downtrend, allowing traders to secure a discount on local lows.
Spot Ether ETF launched to boost ETH price
On May 23, the U.S. Securities and Exchange Commission (SEC) approved the application for a spot Ether ETF, sending the price up more than 12% to surpass $4,000. Before that, the price soared 33% in less than a week in anticipation of approval.
Market participants are now eagerly awaiting the spot Ether ETF to begin trading, with analysts setting July 2 as a possible launch date.
A spot Ether ETF could potentially begin trading in the U.S. by July 2, according to Eric Balchunas, senior ETF analyst at Bloomberg.
Balchunas’ comments mark a return to confidence from his previous stance, in which he claimed Ether ETF applicants were still awaiting feedback from the SEC while it debated whether to delay its July 4 prediction.
“Note: The previous Over/Under was July 4th, so this isn’t a huge change, but it’s somewhat good news because 1) it’s starting to feel like it’s going to take longer; b) Basically we determine the most occurring over/under. We are split 50-50 on where to bet and now July 2nd is the date.”
On May 23, the SEC approved eight 19b-4 filings to list spot Ether ETFs on various U.S. exchanges. However, you cannot begin trading until you receive the required S-1 registration statement approval.
As market participants anticipate the launch of a spot Ether ETF, they expect the price of Ether to rise significantly before and after its debut.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.