Key Points
- Ethereum’s price has fallen by over 2% in the past week.
- A metric suggests that Ethereum is currently overvalued.
After the US Securities and Exchange Commission approved Ethereum ETFs, the cryptocurrency’s price did not immediately rally. However, the market could see changes in the near future.
Understanding Buying Pressure
Before the ETFs were approved, Ethereum’s price was volatile and showed a northward trend due to the anticipation and hype. After the approval, the price action cooled down. In the past week, Ethereum’s price has fallen by over 2% and is currently trading at $3,814.82 with a market capitalization of over $458 billion.
A popular crypto analyst, Ali, reported that approximately 777,000 Ethereum, valued at about $3 billion, have been withdrawn from crypto exchanges since the ETF approval. This could indicate high buying pressure, which might positively impact the token’s price.
On-Chain Metrics Analysis
However, an analysis of on-chain metrics showed a different story. Ethereum’s exchange outflow dropped last week, and its supply on exchanges increased, indicating that investors were selling Ethereum. Additionally, the supply of the token held by top addresses also slightly dropped last week, suggesting that whales were selling Ethereum as it struggled to reach $4k.
A key metric turned bearish on Ethereum as selling pressure increased. The NVT ratio of Ethereum, calculated by dividing the market cap by the transferred on-chain volume measured in USD, registered a sharp uptick on June 1st. A rising NVT ratio suggests that an asset is overvalued, indicating a high likelihood of a price correction.
An analysis of Ethereum’s daily chart showed a bearish crossover in the MACD technical indicator, hinting at a price correction. However, the Chaikin Money Flow (CMF) registered an uptick, and the Relative Strength Index (RSI) looked bullish as it was above the neutral mark. If these two indicators are considered, there could be chances of a price increase.
