Ethereum has experienced a significant drop in price, losing about 15% since March 2024. However, on-chain data suggests that there is a bullish case for the cryptocurrency. Analysts have noted a spike in demand for ETH, especially from permanent holders, who are likely institutional investors with more substantial financial resources. These holders are not easily swayed by market volatility and tend to hold onto their assets for longer periods. According to CryptoQuant data, these permanent holders recently made the second-highest daily purchase of Ethereum on record, buying 298,000 ETH on June 12. This surge in demand signals a strong bullish sentiment in the market.
Despite the positive outlook from institutional investors, Ethereum is currently facing weakness in the market, as indicated by the daily chart. Prices have failed to fully recover from losses on June 11, and sellers have re-entered the market, pushing prices lower. The candlestick arrangement in the daily chart shows that $3,700 is emerging as a significant resistance level for ETH. If the downward trend continues, Ethereum could re-test the $3,300 level. It remains to be seen whether prices will bounce back or continue to decline in the near future.
Amidst the price fluctuations, market sentiment remains generally upbeat, with comments from Gary Gensler, the chair of the United States Securities and Exchange Commission (SEC), adding to the positive outlook. Gensler recently mentioned the possibility of a spot Ethereum exchange-traded fund (ETF) being approved for trading sometime in the summer. BlackRock has already submitted its S-1 filing for the ETF and is awaiting approval. If the ETF is greenlit, it could bring a significant liquidity boost to Ethereum, similar to the impact of spot Bitcoin ETFs. Institutional investors are likely to pour billions into ETH through the ETF, providing their clients with exposure to the cryptocurrency.
While Ethereum is currently facing downward pressure in the market, the strong demand from institutional investors and the potential approval of a spot Ethereum ETF offer a bullish case for the cryptocurrency. Despite the recent price decline, Ethereum continues to attract interest from deep-pocketed investors who are willing to hold onto their assets for the long term. As regulatory developments unfold and market sentiment remains positive, Ethereum could see a resurgence in price and investor interest in the coming months.