Ethereum may be experiencing a recent dip in price, but the sentiment among large investors, often referred to as whales, tells a different story. Since December 26, these whales have added around $350 million worth of Ethereum to their wallets, signaling a potentially bullish outlook for the second-largest cryptocurrency by market capitalization.
Retail Demand Weakens Amid Price Fluctuations
Despite the impressive whale accumulation, retail demand for Ethereum appears to be faltering. The Money Flow Index (MFI), which tracks the flow of money in and out of the cryptocurrency, has struggled to confirm higher lows during this time. This indicates that retail traders have been hesitant to engage in the current market, even as the price of Ethereum has fluctuated.
Between December 18 and December 24, Ethereum saw a brief upward trend; however, the MFI’s failure to rise above key levels suggests a lack of confidence among retail investors. For a more robust demand signal, the MFI needs to exceed the 37 mark, leaving many to wonder how sustainable Ethereum’s price can be without solid retail backing.
Whales Respond With Increased Accumulation
Contrasting with the retreat of retail investors, Ethereum whales have demonstrated a proactive approach by significantly increasing their holdings. Recent on-chain data shows that between December 26 and now, wallets holding large quantities of Ethereum amassed an additional 0.12 million ETH, an amount that translates into about $350 million at current valuations. This buildup typically reflects a long-term investment strategy, with whales leveraging their positions based on broader market trends rather than short-lived price moves.
The increase in whale activity hints that these major players might be preparing for a favorable price movement, confident in Ethereum’s potential despite the current hesitation from smaller investors. Notably, chart analyses reveal a potential inverse head-and-shoulders pattern forming, which could signal a trend reversal if certain price levels are breached.
RSI Bullish Divergence Supports Whale Strategy
The Relative Strength Index (RSI) further strengthens the bullish case for Ethereum whales. Observational data from November 4 to December 25 indicates a distinct bullish divergence; during a period when Ethereum’s price experienced a lower low, the RSI recorded a higher low. This divergence signals diminishing selling pressure, hinting at an imminent shift, even if the market hasn’t yet completely rebounded.
This bullish divergence complements the formation of the inverse head-and-shoulders pattern, typically associated with trend reversals. For whales, this divergence offers substantial confidence in their accumulation strategies as they anticipate a future price ascension once confirmation of this pattern is established.
Price Zones Determine Ethereum’s Next Move
Currently, Ethereum is encountering significant price zones that will determine its next directional movement. The short-term resistance level is set at $3,050, a barrier that must be reclaimed for any bullish momentum to continue. Should Ethereum surpass this hurdle, the next significant resistance lies at approximately $3,390, which represents the neckline of the inverse head-and-shoulders pattern. A successful breakout above this level could place Ethereum on a bullish trajectory toward a price target of $4,400, projected based on the height of the pattern’s head.
However, caution is warranted as a failure to hold the $2,800 support level could negate the bullish structure, leading to a potential downturn toward $2,620. The interplay between retail enthusiasm and whale strategies will be critical in shaping Ethereum’s forthcoming direction.
