The cryptocurrency market experienced a sluggish trend over the weekend. Leading digital assets, Bitcoin (BTC) and Ethereum (ETH), showed neutral candle formation on the daily chart, indicating no clear dominance from buyers or sellers.
However, there is a high potential for an Ethereum rebound following the recent U.S.-listed ETF (Exchange-Traded Fund) launch. Ethereum’s price at the 200-day EMA is seeking support to stabilize its ongoing correction.
Ethereum Faces 13.5% Drop Amid ETF Outflow
Ethereum, the second-largest cryptocurrency, saw a significant downturn this week after the ETF launch. From a weekly high of $3350, Ethereum’s price dropped nearly 8%, settling at $3275. Despite this drop, Ethereum’s market cap remains at $393.8 billion.
The 200-day EMA is currently providing some stabilization for Ethereum after the recent sell-off. However, a bearish crossover between the 20-day and 100-day EMA could increase supply pressure, coupled with a notable outflow from the Grayscale Ethereum Trust ETF (ETHE).
Bearish Momentum and Potential for Further Decline
The ADX slope uptick at 23% indicates persistent bearish momentum in the Ethereum price forecast, suggesting the potential for an extended correction. If supply pressure continues, Ethereum’s price could drop another 13.5% to $2800, finding support at the lower trend of the bull flag. This continuation chart pattern has maintained price consolidation within two converging trendlines for the past four months.
Institutional Demand Amid Price Decline
Despite the price decline, IntoTheBlock reported a significant increase in large transaction volumes for Ethereum. According to their data, the total volume of large ETH transactions reached a monthly high following the Ethereum ETF launch. This surge in transaction volume indicates growing institutional interest and demand for Ethereum.
Potential for Bullish Turnaround
Given the growing institutional demand, Ethereum’s price is poised for a bullish turnaround. This could uplift the asset to $3800-$3750 and challenge the flag pattern resistance. A potential breakout from the overhead trendline could renew the prevailing uptrend, pushing buyers to aim for the $5600 mark.
Key Takeaway
Despite a broader bullish trend in the last week of July, Ethereum’s price witnessed a notable correction following the spot ETH ETF debut. A similar pullback was observed in Bitcoin after its ETF launch in January, suggesting a pattern of temporary pullbacks to eliminate weak hands from the market. As Bitcoin rallied in February and reached new all-time highs, Ethereum saw significant growth in August.
