Ethereum price gets back to $3K as institutional investors pile into ETH futures

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Ethereum’s native token Ether (ETH) staged a rebound on Sept. 26 following a massive decline earlier this week that saw its prices plunging to as low as $2,651 on Coinbase.

The ETH/USD exchange rate rose 3.63% to hit an intraday high of $3,030. The upside move amounted to a 14.3% upside retracement from the pair’s week-to-date low at $2,651, showing that traders attempted to retain their bullish bias despite potential headwinds ahead.

Last week, Ether prices fell due to a flurry of issues arising from China. On Monday, traders dumped crypto assets en masse after a tumult in China’s heavily indebted property market prompted a selloff across global stock markets.

A rebound move ensued later in the week but met with another selloff on Friday after People’s Bank of China reiterated that crypto transactions are illegal. Nonetheless, Ethereum bulls maintained their foothold and pushed prices back above $3,000, a psychological resistance level.

ETH/USD daily price chart. Source: TradingView.com

The sentiments were similar across some top crypto assets, with the benchmark cryptocurrency Bitcoin hitting an intraday high of $43,767 on Coinbase following a 2.49% upside move. Meanwhile, Uniswap exchange’s native asset UNI also fared higher by more than 19%, becoming the top-performing crypto asset at least in the previous 24 hours.

At the same time, Ethereum’s top rivals Cardano (ADA) and Solana (SOL) performed poorly, with ADA/USD dropping more than 5% and SOL/USD losing over 3% on a 24-hour adjusted timeframe.

Institutional demand

Ethereum gains also followed a bullish report thifrom JPMorgan & Chase. The study noted that institutional investors have started increasing their exposure in Ethereum markets.

Analysts at JPMorgan credited the ongoing craze in the decentralized finance (DeFi) and nonfungible token (NFT) sector as the primary driver behind investors' interest in Ethereum. They added that the 21-day average Ethereum Futures premium climbed to 1% over spot ETH prices, citing the Chicago Mercantile Exchange (CME) data recorded since August.

Ethereum Futures daily price chart. Source: TradingView.com

The JPMorgan report coincided with a record amount of Ether tokens getting withdrawn out of all crypto exchanges, as per data provided by CryptoQuant. At press time, the net ETH reserves on trading platforms had dropped to 18.44 million ETH compared to 23.94 million ETH a year ago.

Related: Ethereum drops more than Bitcoin as China escalates crypto ban, ETH/BTC at 3-week low

Independent analyst PostyXBT also anticipates a potential further price rebound in Ethereum markets, noting that the cryptocurrency’s latest declines had pushed it inside a classic accumulation range, as shown in the chart below.

ETH/USD weekly price chart featuring its latest accumulation range. Source: PostXBT, TradingView.com

“Weekly close equally as important for ETH today as price tests the previous range highs as support,” the analyst noted.

“Seems like a logical area to make a higher low and I have bought more here for long-term bags/swing trade. RR looks favorable after a 33% correction from the local top.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Ethereum balance on crypto exchanges hits new lows as ETH price retakes $3K

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The total amount of Ether (ETH) held by all the crypto exchanges fell to its lowest levels, just as its price rose back above $3,000 per token on Sept. 23.

Data collected by CryptoQuant, a blockchain analytics platform, showed that exchanges' net Ethereum token reserves dropped to 18.533 million ETH, compared to 23.92 million ETH a year ago. Meanwhile, the cost to purchase one Ether rose from almost $349 to as high as $3,078, showcasing an inverse correlation between ETH reserves on exchanges and prices.

Ethereum all exchange reserves versus ETH/USD price performance. Source: CryptoQuant

Supply-demand factor

Lower exchange reserves point to traders' likelihood of holding the underlying cryptocurrency than trading it for other digital/fiat assets. Hence, if the demand for the token tends to rise, the lack of adequate supply helps to boost prices.

So it appears, Ethereum’s native token has started fitting the classic low supply-high demand bullish model. For instance, Dapp Radar reported that the total value locked (TVL) across the decentralized applications industry reached $142 billion, out of which 68% was concentrated on the Ethereum network as of August 2021.

On the other hand, more and more Ether tokens started going out of active supply after Ethereum announced its staking feature in Nov 2020, as the network geared up to become a full-fledged proof-of-stake blockchain by 2022.

In detail, the TVL inside the so-called Ethereum 2.0 smart contracts rose from 11,616 ETH in November 2020 to 7.75 million ETH on Sept. 23.

Total value staked in Ethereum 2.0 smart contracts. Source: TradingView.com

Additionally, a major network upgrade on August 5, 2021, dubbed London Hard Fork, added a feature that trimmed the pace at which Ether supply grows. The change, called EIP-1559, started splitting almost 13,000 new ETH issued every day for miner payment fees into three parts.

The network started burning one of these splits—the base fee users pay to miners to process transactions. As a result, more ETH tokens went out of supply. Data tracking portal WatchTheBurn.com noted that the EIP-1559 feature has contributed in the burning of 352,262 ETH to date, which is about $1.1 billion per the current exchange rates.

Lark Davis, an independent cryptocurrency market analyst, stated that the ongoing supply-demand dynamics in the Ethereum market would help to shoot ETH prices towards $10,000.

#ethereum supply on exchanges just keeps dropping, and the price just keeps rising. $10,000 is programmed in already. pic.twitter.com/jRTUYHK4Ca — Lark Davis (@TheCryptoLark) September 17, 2021

The macro effect

Cryptocurrency markets this week performed in response to a looming housing crisis in Chinese property sector and its ripple effect across global economies.

In detail, the ETH/USD exchange rate dropped 20.78% in the first two days of this week, going to as low as $2,651 as investors limited exposure in riskier markets and scrapped for safer havens like the U.S. dollar and Treasury bonds. Fears of contagion from the debt crisis at China Evergrande Group, which owes billions of dollars of bonds to global investors, sparked the sell-off.

ETH/USD daily price chart featuring correlation with BTC/USD and S&P 500. Source: TradingView.com

Ether bounced by as much as 18.82% after bottoming out locally at $2,651, including a 2.33% increase to $3,150 on Thursday. Nonetheless, the cryptocurrency’s 50-day exponential moving average (50-day EMA) near $3,191 and 20-day EMA near $3,291 acted as strong resistance targets.

Related: Ethereum forming a double top? ETH price loses 12.5% amid Evergrande contagion fears

Blockchain data tracking service Santiment noted that the Ethereum token might keep bouncing as long as its short-term holders remain unprofitable. The portal cited the market value to realized value (MVRV) ratio—calculated on a seven-day average—behind its bullish analogy.

ETH/USD MVRV 7D. Source: Sanbase

Excerpt from Santiment’s Wednesday report:

“Short-term wise, MVRV 7D is suggesting a bounce, but the real rally is unlikely until we get closer to the next major speculative event - The transition to Proof-of-Stake (PoS) in 2022.”

Ethereum: We got the “Pullback, Rally, Significant Pullback.” Expect a Rally Soon

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It has been a month since I last provided my Elliott Wave Principle (EWP) based insights into Ethereum (ETH), so it is time to continue the story. Back then, see here and here, I was looking for a more minor degree 4th wave pullback to ideally $2865, then a 5th wave rally to complete a larger 1st wave top at ideally $3585, followed by a more significant 2nd wave pullback to ideally $2400-2600. See Figure 1 below.

What transpired? Ether had a complex (red) intermediate wave-iv to $2952 (August 18 low), an extended -subdividing- wave-v to complete (black) major wave-1 at $4026on September 3, and ETH dropped to as low as $2678 on Tuesday, September 21. Albeit the cryptocurrency did not adhere to the ideal/textbook path, the overall pattern forecasted over a month ago, and in fact, already drafted early August (see here), came to fruition.

IMHO there is no other and better method available than the EWP to know what path lies ahead, even almost two months in advance! Hence, my premium crypto trading members are always well-aware of the course that lies ahead, giving them a tremendous edge over those who do not. They are also aware that we are dealing with a probabilistic environment. All we can do is anticipate the ideal/textbook path, monitor the price action to see if it adheres, and then adjust as necessary. In this case, only a few adjustments were required. So what’s next for Ethereum?

Figure 1. ETH daily chart with EWP count and technical indicators.

The “pullback, rally, significant pullback” came and went. Wave-2 looks about complete

Corrections always are made up of at least three waves: an initiation move down (wave-a), a dead-cat bounce (wave-b), final leg lower (wave-c). In this case, see Figure 1, I can identify three (red) intermediate waves (a,b,c) since the $4026 high made September 3. Depending type of correction (zigzag vs. flat vs. triangle vs. complex), the c-wave is often about equal in length to the a-wave, measured from the bounce (b-wave) high.

Story continues

Here c=a targeted around $2800. ETH bottomed at $2678, which is well within reasonable margins of error. The recent two-day rally can still be a smaller degree 4th wave of this c-wave: green minor-4, but it is unnecessary. If it is, ETH will fall below $2678 one last time, target the 62.8% retrace of wave-1 at $2575 and then reverse higher.

Remember, back in August, I forecasted, “…a multi-week correction, wave-2, should unfold. It can target anywhere between $2145-2865 depending on how deep or shallow this wave-2 will become. It is impossible to know beforehand. However, typically 2nd waves retrace about 50-62% of the entire prior 1st wave, so I anticipate for now -without having any data at hand yet to confirm a bottom in the $2380-2590 zone (orange rectangle). Once more price data becomes available, I can fine-tune this pending and anticipated low.”

Bottom line: In an uncertain world, one can not expect me to foresee every move and every tick weeks beforehand. But with the EWP, I was able to have an excellent idea of what was ahead for ETH weeks in advance and to a degree of accuracy, no other method IMHO can. Thus, my wave-1,2 forecast has been of the “so far so good” type, if I may say so myself. If $2678 was all she wrote, I consider that forecast complete and will start to look for the setup towards $9000. If $2678 does not hold, expect a trip to $2575. Ethereum will have to drop below that level to suggest a trip back down to the recent summer lows that can still be in the cards.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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