Ethereum price has pulled back in the past few days as demand for its exchange-traded funds (ETFs) and from treasury companies faded. Its pullback also coincided with the recent crypto market crash that pushed most assets lower last week.
Ether was trading at $4,000, down from the year-to-date high $4,920. So, will it rebound this week?
Why Ethereum price has crashed
ETH price has plunged in the past days as investors started to book profits after the recent surge that pushed it from a low of $1,380 to nearly $5,000. It is common for an asset, especially in the crypto industry, to retreat after going through a strong rally.
The other main reason for the plunge is that demand from American investors has waned in the past few days. Data shows that these funds had outflows worth about $248 million on Friday last week.
These funds shed a record $795 million in assets last week after they added $556 million in the previous week. BlackRock’s ETHA is still the biggest Ethereum ETF with over $15 billion in assets, while Grayscale’s ETHE has $4.26 billion.
All Ethereum ETFs now hold about $26 billion in assets, equivalent to 5.37% of its market capitalization.
The other main reason why Ethereum price has crashed is that no Ethereum Treasury company has made any major acquisition recently.
Data shows that these companies now hold about 3.61 million ETH coins today, a level they have remained at in the past few weeks.
Tom Lee’s BitMine Immersion now holds about 1.713 million coins worth $6.86 billion, with its last purchase being on August 28. SharpLink Gaming holds 797,704 coins worth about $3.19 billion.
The other top companies that hold Ethereum are firms like BitDigital, Coinbase, and The Ether Machine.
One reason for the sluggish growth is that demand for treasury companies among investors has faded in the past few months. For example, MSTR stock price has tumbled into a bear market while other Bitcoin treasury companies have had a worse performance.
Ethereum price has also plunged because of the weakness of its ecosystem. Data shows that the total value locked (TVL) in its ecosystem has dropped by 12% in the last 30 days to $181 billion. The stablecoin supply in the network has dropped by 2.32% in the previous 7 days to $157 billion.
ETH price technical analysis
The daily timeframe chart shows that the Ethereum price peaked at a record high of $4,918 in late August and then pulled back to the current $4,000.
Ether has moved below the important support level at $4,062, the highest point in December last year.
The coin has moved slightly below the 50-day and 25-day Exponential Moving Averages (EMA).
On the positive side, this pullback is part of the handle section of the cup-and-handle pattern that has been forming since November last year.
Also, it bottomed at the Major S&R pivot point at $3,750. It is common for an asset to rebound whenever it hits this resistance point.
Most importantly, it also formed a Harami candlestick, which happens when a bullish candle is fully enclosed inside a large bearish one. This pattern often leads to a rebound.
Therefore, the coin will likely have a bullish reversal, with the next key resistance level to watch being at 4,900.
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