Key Points
- Ethereum’s supply on exchanges has increased, indicating a bearish trend.
- Despite this, metrics suggest Ethereum is undervalued, hinting at a potential price increase.
The approval of Ethereum [ETH] ETFs by the U.S Securities and Exchange Commission (SEC) was a significant event. However, the aftermath was not as positive as anticipated, with Ethereum showing a bearish trend. It’s crucial to understand what’s happening.
ETF Approval and Price Decline
Eight applications for Ethereum ETFs were approved by the SEC on 23 May. Despite expectations of a price surge following this approval, Ethereum’s price actually fell. According to CoinMarketCap, Ethereum’s bull run ended with a nearly 2% price drop within 24 hours, trading at $3,766.04 with a market capitalization of over $452 billion.
Crypto-analyst Ali suggested several reasons for this bearish trend. A significant sell-off occurred after the ETF approval, potentially due to profit-taking by investors. Furthermore, Ethereum’s supply on exchanges also spiked, indicating increased selling pressure. A key indicator, TD sequential, also signaled a sell trend on Ethereum’s price chart.
Potential for Price Increase
However, the bearish trend could reverse if Ethereum reaches a resistance level between $3,940 and $4,054. If Ethereum manages to close above $4,170, the bearish trend might end.
Analysis of Ethereum’s on-chain metrics supports the possibility of a price increase. Ethereum’s NVT ratio registered a sharp decline, suggesting the asset is undervalued and may see a price increase. However, Ethereum’s fear and greed index was at 67%, indicating a “greed” phase and a high chance of a price correction.
Ethereum’s Chaikin Money Flow (CMF) has been steady in recent days, as has the Relative Strength Index’s (RSI) chart. These indicators suggest that investors might see slow movement in the coming days.
