Ethereum (ETH) is down 2% on Monday, trading near the $2,000 psychological level despite increased exchange net outflows. The sustained negative market sentiment is potentially coming from crypto exchange-traded funds (ETFs) investors who have continued to scale down their holdings.
Ethereum saw one of its highest exchange weekly net outflows last week following its decline to the $2,000 psychological level. Crypto exchanges witnessed an ETH net outflow of about $1.8 billion last week, the highest weekly amount since December 2022, according to IntoTheBlock's data.
"Despite ongoing pessimism around Ether prices, this trend suggests many holders see current levels as a strategic buying opportunity," wrote IntoTheBlock analysts in an X post on Monday.
ETH exchange netflows. Source: IntoTheBlock
An increase in exchange net outflows indicates high buying pressure, while vice versa for inflows.
The increased buy-the-dip attitude near $2,000 suggests ETH could be primed for a recovery, but institutional investors' selling pressure is weighing on the crypto market.
While crypto-native investors are buying the dip, institutional investors are depleting their holdings. This is visible in US spot ETH ETFs' flows, which show a net outflow of about $94 million last week, per Coinglass data. Unlike exchange net outflows, rising ETF outflows indicate higher selling pressure.
A potential reason for the selling activity is crypto's rising correlation to traditional stocks and macroeconomic conditions. The S&P 500 has declined by over 450 points since hitting an all-time high on February 19, showing increased risk-off sentiments amid President Donald Trump's tariff decisions on US international trading partners.
With the same traditional stock players also treading the crypto market via Bitcoin and Ethereum ETFs, the prices of top cryptos may remain subdued by their investment sentiment. According to a CoinShares report on Monday, crypto ETFs have lost $4.75 billion in the past four weeks.
Ethereum experienced $117.96 million in futures liquidations in the past 24 hours, per Coinglass data. The total amount of long and short liquidations accounted for $81.01 million and $36.94 million, respectively.
ETH is struggling to hold the $2,000 psychological level after sustaining a weekly candlestick close below the $2,200 critical level last week. If the bearish pressure extends throughout the new week, ETH could decline toward the next key support level at $1,500.
ETH/USDT daily chart
The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicators are below their neutral levels, indicating dominant bearish momentum.
However, the Stochastic Oscillator (Stoch) is deep in the oversold region, signaling a potential reversal. As a result, ETH could flip the bearish pressure if it pulls a high volume move above $2,200 and smashes a key ascending trendline resistance.
A weekly candlestick close below $1,500 will invalidate the thesis and potentially send ETH below the $1,000 psychological level.
Ethereum is a decentralized open-source blockchain with smart contracts functionality. Its native currency Ether (ETH), is the second-largest cryptocurrency and number one altcoin by market capitalization. The Ethereum network is tailored for building crypto solutions like decentralized finance (DeFi), GameFi, non-fungible tokens (NFTs), decentralized autonomous organizations (DAOs), etc.
Ethereum is a public decentralized blockchain technology, where developers can build and deploy applications that function without the need for a central authority. To make this easier, the network leverages the Solidity programming language and Ethereum virtual machine which helps developers create and launch applications with smart contract functionality.
Smart contracts are publicly verifiable codes that automates agreements between two or more parties. Basically, these codes self-execute encoded actions when predetermined conditions are met.
Staking is a process of earning yield on your idle crypto assets by locking them in a crypto protocol for a specified duration as a means of contributing to its security. Ethereum transitioned from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) consensus mechanism on September 15, 2022, in an event christened “The Merge.” The Merge was a key part of Ethereum's roadmap to achieve high-level scalability, decentralization and security while remaining sustainable. Unlike PoW, which requires the use of expensive hardware, PoS reduces the barrier of entry for validators by leveraging the use of crypto tokens as the core foundation of its consensus process.
Gas is the unit for measuring transaction fees that users pay for conducting transactions on Ethereum. During periods of network congestion, gas can be extremely high, causing validators to prioritize transactions based on their fees.