Ethereum, the second-largest cryptocurrency by market capitalization, has long been expected by crypto investors to surpass the psychological level of $5,000. However, despite the launch of spot exchange-traded funds (ETFs) that pushed Bitcoin to new highs, Ethereum prices have struggled to sustain directional gains. Here’s what’s preventing Ethereum’s price from raising the “God’s Candle” into the $5,000 range.
Spot Ethereum ETF struggles to attract investor interest
Unlinked Bitcoin, an Ethereum spot ETF, has struggled to attract investor interest and capital since its debut on July 23. Since then, Ethereum price has been on a downward trend, plummeting 23% and currently stabilizing above the $2,200 level.
Yesterday, the Spot ETH ETF recorded modest inflows of $3.06 million and maintained similarly low inflows throughout the week.
In May, Eric Balciunas, senior ETF analyst at Bloomberg, said, “One of the challenges for the Ether ETF in penetrating the 60/40 boomer world is that it has to make its purpose and value more understandable and ‘Bitcoin-like.’ He said it’s about distilling it into a soundbite. Digital gold. ”
PlusToken’s ETH stash sale causes market concerns
The PlusToken scheme is one of the largest fraudulent crypto Ponzi operations, operating in China from 2018 to 2019. When authorities shut it down, they seized approximately 194,000 BTC and 830,000 ETH from the fraud leader.
While the majority of Bitcoin was liquidated, Ethereum coin remained untouched.
According to OTC Research, the Chinese government has begun selling the remaining 542,000 ETH (worth approximately $1.3 billion). In the past 24 hours, 15.7,000 ETH were transferred to unknown addresses and 7,000 ETH were moved to exchanges, sparking speculation of a potential sale.
In early August, the remains of ETH seized from the multi-billion dollar PlusToken scheme woke up on-chain for the first time since 2021.
In the past 24 hours, approximately 7,000 ETH of the remaining 542,000 ETH ($1.3 billion) was transferred to the exchange, which has indicated its intention to begin selling the remaining tokens. pic.twitter.com/tu2o7y4o4L
— ∴FreeSamourai∴ (@ErgoBTC) October 9, 2024
These large trades could delay ETH’s rise to $5,000.
Ether issuance rate reaches highest level in 2 years amid L2 growth
According to SatoshClub, the Ethereum issuance rate reached 0.74% in September, a two-year high. This increase in supply suggests that the network is facing higher inflation rates than in recent months.
The deflationary path that Ethereum took with Fevern was heavily influenced by the increased usage of Layer 2 (L2) solutions following the Decun upgrade. L2 networks such as Arbitrum and Optimism offer cheap transaction fees, which pulls activity away from Ethereum’s mainnet, resulting in less write activity.
The increased supply will put downward pressure on the coin price as more ETH is being minted and Ethereum’s deflationary mechanism is malfunctioning.
$ETHThe issuance interest rate reached approximately 0.74% in September, the highest level in two years.
The path to deflation is likely to depend on whether mainnet activity picks up as users flock to cheaper L2 solutions. pic.twitter.com/DFncZl7264
— Satoshi Club (@esatoshiclub) October 11, 2024
Analyst predicts short pullback before ETH price rises
A recent chart analysis by cryptocurrency trading firm Inmortal provides a short-term and long-term outlook for Ethereum price. The attached chart shows that ETH price could extend the current correction trend by 13% to reach multi-month support at $2,104.
Analysts are also highlighting the possibility of a false breakdown from $2,104, but buyers could regain bullish momentum on this support, which could lead to a significant jump. A post-reversal rally could take the asset to a high of $4,200.
ETH/USDT -1 day chart
On the contrary, note that if buyers fail to sustain $2000, the Ethereum price prediction will enter a major correction.
Frequently asked questions (FAQ)
The Chinese government may have started selling the remaining 542,000 ETH seized from the PlusToken Ponzi scheme. These sales raise market concerns about potential downward pressure and could delay Ethereum’s rise to $5,000.
Experts believe that the complexity of Ethereum’s story compared to Bitcoin’s “digital gold” proposition makes it difficult for traditional investors to grasp its value.
Analysts predict that Ethereum price could correct by 13% and fall to the support level at $2,104.
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Sahil Mahadik
Sahil is a dedicated full-time trader with over 3 years of experience in financial markets. He has a strong grasp of technical analysis and keeps a close eye on daily price movements of top assets and indices. Drawn by his fascination with financial products, Sahil enthusiastically embraced the emerging field of cryptocurrencies, where his passion for trading continues to explore opportunities.
Disclaimer: The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.
