Ethereum (ETH) has hit a bump in the road, seeing a notable drop of 8% as it succumbed to rising geopolitical tensions between the US and Iran. The cryptocurrency, which had begun to build momentum, fell sharply from $2,465 to a low of $2,253, trading just above the critical support level of $2,250 as of now.
The recent price action indicates that ETH is struggling with resistance at $2,300, which is reflected in the formation of a bearish trend line on the hourly chart. As analysts continue to evaluate near-term support, the critical zone of $2,250 is now at the center of attention. Should Ethereum manage to hold above this level, it could attempt a rebound; potential resistance points to watch include $2,300 and $2,335. If the asset can break above $2,360, it opens the door for recovery towards $2,415 and potentially back to the highs of $2,465.
However, traders must brace for further downside risks. A slip below $2,220 could result in a plunge towards $2,200, with further drops projected to $2,150 and a troubling possibility of approaching $2,120 if bearish momentum continues.
Strong ETF Inflows Amidst Price Weakness
Amidst the current volatility and price weakness, Ethereum spot ETFs have shown resilience with a remarkable total of $276 million in net inflows during the week of April 13 to April 17. Fidelity’s FETH ETF led these inflows with $126 million, contributing to its impressive total historical inflows of $2.36 billion. Notably, while Ethereum’s price has faltered, Bitcoin spot ETFs experienced a rush of $996 million in inflows, underscoring the contrasting dynamics at play in the crypto market.
BlackRock’s ETHA ETF followed closely behind, boasting $99.2 million in inflows for the same period, reflecting a significant cumulative total of $11.83 billion. Nevertheless, Grayscale’s ETHE faced a setback with $16.7 million in outflows last week, bringing a mixed sentiment to the ETF landscape. Currently, total net assets across Ethereum spot ETFs stand strong at $14.26 billion, indicating persistent investor interest despite the fluctuations.
Market Supply Dynamics
From a supply perspective, Ethereum continues to show a tightening market as over 32% of the total ETH supply is now staked. This reduction in active circulation diminishes the readily available supply on exchanges, potentially influencing future price movements as demand fluctuates.
Recent trading data indicates a preference for derivatives over spot trading among investors, with perpetual futures volume reaching $34.74 billion against $14.29 billion in spot volume. As open interest has dipped 5.75% to $31.18 billion and funding rates have turned negative, there is an increasing undercurrent of short-selling pressure in the market.
Despite these challenges, there are signs that buyers are beginning to return to the market. Net Taker Volume has shifted into positive territory, recording approximately +$102 million since March, a welcome change following a previous trend of heavy selling during price rallies.
As the dust settles, Ethereum’s price remains precariously positioned below $2,350, with the critical question being whether the bulls can defend the $2,250 support level. The ongoing tensions and external factors will continue to play a significant role in shaping the trajectory of ETH in the days ahead.
