There are three reasons why Ether price remains bullish around $3,500
Despite Bitcoin’s sell-off to $65,000, ETH continues to show strength, and bulls appear to be strengthening at the $3,500 level. Ether ETH $3,442 dropped to a low of $3,363 on June 16 after slipping 15% from $4,000. The second-largest cryptocurrency by market capitalization is down 4% over the last seven days.
Data from Cointelegraph Markets Pro and TradingView show Ether’s price hovering around $3,518, about 14% below its multi-year high of $4,091 set on March 12. Accompanying Ether’s decline is a 43% leap in daily trading volume, currently at $14 billion, reinforcing the high sell-side activity. Despite this gloomy outlook, ETH has found support from the $3,500 level, and several technical and on-chain metrics point to an upside potential for Ether.
Reducing supply on exchanges
Reducing supply on exchanges is one element supporting Ether’s price increase. According to on-chain data source CryptoQuant, Ether holdings on exchanges have reached a five-year low of 16.7 million ETH, following a 9.3% loss in the previous 90 days.
The net balance of inflows and outflows among centralised exchange wallets fell sharply between May 20 and June 14, when withdrawals from trading platforms increased. This reduction coincides with a 14% increase in Ether’s price over the same period.
A decrease in ETH supply on exchanges merely implies that investors are withdrawing their tokens into self-custody wallets, indicating that they do not intend to sell in expectation of a future price gain. This explains the recent spike in accumulation by significant holders.
In a June 16 post on X, prominent trader Ali Martinez released a Sentiment chart, stating that Ethereum whales purchased over 700,000 ETH in the preceding three weeks, totaling almost $2.45 billion.This suggests that whales did not sell during ETH’s recent run to $4,000, which was spurred by the introduction of spot Ether exchange-traded funds (ETFs) in the United States. Instead, they have continued to accumulate, indicating that majority seek to position themselves for future gains.
Spike in Ether’s open interest backs ETH upside
Increased demand for leverage drove up ETH futures open interest (OI), which rose from $15.06 billion on June 14 to roughly $16.15 billion today. According to CoinGlass data, Ether futures OI surpassed $12 billion on May 21, having fallen below this level on April 14. From there, tOI has risen by roughly 36% in less than 30 days, indicating rising demand for leveraged ETH investments.
Ethereum’s onchain and derivatives markets reflect investors’ excitement and anticipation of a spot Ether ETF debut in the coming weeks. From a technical standpoint, ETH’s most recent dip precedes a period of increasing positive divergence between its price and the relative strength index (RSI) over the last four hours.
Launch of spot Ether ETFs to drive ETH price higher
The unprecedented clearance of spot Ether ETF applications by the United States Securities and Exchange Commission (SEC) on May 23 sent the price up more than 12%, approaching $4,000. Before that, the price increased by 33% in less than a week in anticipation of the approval.
Market participants are now eagerly awaiting the start of trading in spot Ether ETFs, with many predicting a July 2 launch. According to Bloomberg senior ETF analyst Eric Balchunas, spot Ether ETFs might start trading in the United States by July 2. Balchunas’ comments indicated a shift in confidence from his prior stance, when he said that Ethereum ETF applicants were still waiting for input from the SEC while discussing whether to postpone his July 4 prediction.
“Note: our previous over/under was July 4th so this isn’t a major shift but 1) we started to feel like it would take longer so this is kinda good news and b) we decided the over/under on where are most torn 50-50 on where to bet and July 2nd is that date right now.”
On May 23, the SEC accepted eight 19b-4 filings to list spot Ethereum ETFs on multiple US exchanges. However, they cannot begin trading until they receive the necessary S-1 registration statement approvals.Market participants expect Ether’s price to rise dramatically in the days leading up to and following the launch of spot Ether ETFs.
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