Ethereum continues to hold steady as it trades between $3,100 and $3,200, marking a critical moment for the second-largest cryptocurrency by market capitalization. After an impressive six-day winning streak, Ethereum encountered its first red candle, signaling a period of consolidation and mixed market signals.
As of recent trading, Ethereum is priced at approximately $3,212—a slight decline of 0.6% over the previous day. Nonetheless, positive momentum remains as the cryptocurrency has gained 7.6% over the past week and 2.5% over the past month.
On January 6, the Ethereum ETF market experienced significant activity, with a total of $114.7 million in inflows. Leading the charge was BlackRock’s ETHA fund, which attracted $198.8 million in new investments, contributing to a remarkable three-day streak of inflows beginning January 2. Initial activity included inflows of $174.5 million on the first day followed by $168 million on January 5.
ETF Flows Shift Direction
However, the bullish trend faced a setback on January 7, as Ethereum ETFs recorded net outflows amounting to $98.6 million on that day. Grayscale’s ETHE was at the forefront of these withdrawals, witnessing a $52 million outflow, likely indicative of profit-taking following ETH’s notable weekly gains of 10%.
Despite the recent downturn in flows, spot Ether ETFs have only shed $2.8 billion from their peak of $15 billion, accounting for a mere 18% of total flows, as per Bloomberg analyst James Seyffart. This indicates a resilient market despite fluctuations.
In a noteworthy development, Morgan Stanley recently filed an S-1 registration with the SEC for a new Ethereum Trust, showcasing its commitment to the crypto sector as its third crypto ETF application this week, following filings for Bitcoin and Solana products. The proposed Ethereum fund aims to track spot Ether prices while providing staking services to generate passive income.
Whale Activity Illustrates Market Dynamics
In parallel, whale activity illustrates mixed signals as World Liberty Financial opted to decrease its Wrapped Bitcoin (WBTC) exposure. The DeFi project withdrew 162.69 WBTC, valued at $14.98 million, from Aave before swapping 27.12 WBTC, worth $2.5 million, for 770.6 Ethereum. This move suggests a renewed confidence in Ethereum’s potential.
Taking a broader view, large investors acquired $4.83 million worth of spot Ether across 32 wallets over the past week, while smart money traders sold $8.9 million across 63 wallets, reflecting the dynamic nature of crypto investor sentiment.
Moreover, newly created wallets in the last two weeks have contributed significantly, adding $2.34 billion in spot Ether tokens, pointing towards the fresh demand from newcomers to the market. BlackRock itself made a substantial purchase of $149 million worth of ETH within three days but simultaneously transferred 7,255 ETH, valued at $22.8 million, to Coinbase—highlighting the balancing act large investors often undertake.
In terms of technical performance, Ethereum recently completed its second blob parameter-only fork, raising the blob target from 10 to 14 and increasing the maximum blob limit from 15 to 21. This critical upgrade is expected to enhance network capacity, particularly benefiting layer-2 scaling solutions, including Base, Arbitrum, and Optimism.
Technical analysis indicates an essential support level lies at $3,032, representing the 61.8% Fibonacci level. The inability to breach the $3,200 resistance has prompted some sell-offs, making the upcoming trading sessions crucial for Ethereum’s trajectory. Analysts are keeping a close watch on whether the support at $3,020-$3,050 will hold, potentially sparking a reversal if successful.
