- Ethereum ETFs recorded $77.3 million in net outflows on Wednesday.
- Wallet related to Elwood Technologies has moved 19,500 ETH to Binance within the past two days.
- Ethereum could bounce off key support level to set new yearly high.
Ethereum (ETH) is down 6% on Thursday following huge exchange deposits by Elwood Technologies and net outflows across ETH ETFs.
Daily digest market movers: Fed rates, Negative flows, ETH exchange deposit
Following the Federal Reserve’s decision to keep rates steady at 5.25%- 5.50%, the crypto market has entered a downturn, with Ethereum taking a 6% hit. This also affected the flows seen in Ethereum ETFs.
The combined flows for the nine Ethereum ETFs were negative at -$77.3 million on July 31 as the new Eight failed to soak up $133 million in outflows from Grayscale Ethereum Trust (ETHE).
While ETH ETFs haven’t been able to affect ETH’s price, Katalin Tischhauser, Head of Investment Research at Sygnum Bank, predicted that they could rake in $5 billion to $10 billion in an interview with Cointelegraph.
She predicted that ETH could rally if/when inflows “turn positive and accelerate” as the market is yet to price in the impact of potential high inflows in ETH ETFs.
Tischhauser noted that ETH could rise to $6,000 if its inflow follows a similar pattern to spot Bitcoin ETFs.
Meanwhile, three wallets related to Elwood Technologies have transferred 19,500 ETH worth $63.66 million to Binance in the past two days, according to data from Lookonchain. This marks the second consecutive time that the wallets’ exchange deposits coincided with a crash in ETH’s price.
ETH technical analysis: Ethereum could bounce off key support
Ethereum is trading around $3,110 on Thursday, down more than 6% on the day. The price drop triggered over $77.96 million in liquidations, with long and short liquidations accounting for 94% and 6%, respectively.
ETH Long/Short Ratio has declined to 0.92, indicating that most traders expect further price decreases. The support ranging from $2,852 to $2,803 will prove crucial if ETH’s price plunges further. ETH has tested this level several times in the past four months, but buyers have always entered the market to prevent a further decline. As a result, a price rise has often accompanied a move to this level.
ETH/USDT Daily chart
Also, most traders are bullish in the long term due to the potential effect of spot ETH ETFs when Grayscale outflows diminish.
Hence, ETH could rise over 30% in the coming weeks to test the $4,093 resistance. A move below $2,800 will invalidate the bullish thesis.
Ethereum development FAQs
After the Merge, the Ethereum community is looking at the Sharding upgrade next, which has been slated for sometime later in the year. The development can be summarized in four words, “scalability through more efficient data storage.” The software update will increase the capacity of the blockchain, widening the amount of data that can be stored or accessed. At the same time, all services running atop the Ethereum blockchain will enjoy significantly reduced transaction fees.
A fork is the splitting of a blockchain after developers agree and proceed to implement upgrades. The decision comes after these developers reach a consensus for a software upgrade. The ensuing part will see one part continue with the status as is, while the other one will proceed with new features combined with the former ones. A hard fork basically entails permanent divergence of a new side chain from the original one, while a soft fork is doing the same, only difference being that it is temporary.
EIP-4844 is an improvement proposal for the Ethereum network. The upgrade promises reduced gas fees, which is a valuable offering considering the high transaction cost that continues to daunt crypto players. It has been a long-standing concern for the Ethereum network. The proposal is also referred to as “proto-Danksharding,” with an unmatched ability to increase the speed of transactions on the Ethereum blockchain. At the same time, it helps to reduce the transaction cost as everything becomes decentralized.
Gas token is a new, innovative Ethereum contract where users can tokenize gas on the Ethereum network. This means they can store gas when it is cheap and start to deploy the gas once the market has shifted to the north. The use of Gas token helps to subsidize high gas prices on transactions, meaning investors can do everything from arbitraging decentralized exchanges to buying into initial coin offerings (ICOs) early.
Source