The price of Ethereum has been influenced by market sentiment, despite having a relatively positive week. On September 6, Ark Invest filed for the first Ethereum spot exchange-traded fund (ETF) in the United States. However, this news didn’t have a significant impact on the price of Ethereum, and the token has almost fully reversed the minor gains from the announcement.
Currently, Ethereum is trading at around $1,628, reflecting a negligible 0.1% price increase in the last seven days, which underscores the struggling market performance of the second-largest cryptocurrency. A spot ETH exchange-traded fund is an investment vehicle that tracks the price of Ethereum on the spot market, allowing investors to buy and sell the crypto asset via a brokerage account. This type of product is expected to boost interest and investment in the Ether token.
Despite the optimistic news of the ETF application, the price of Ethereum has remained relatively unmoved this week, and a recent report by blockchain analytics firm IntoTheBlock sheds light on why the news barely impacted the price of Ethereum.
According to IntoTheBlock, the current supply and demand balance is one of the primary reasons why the ETH price continues to move sideways. The firm suggests that large holdings are concentrated close to Ethereum’s current price, resulting in consolidating prices in a tight range. IntoTheBlock’s data shows that 5.1 million ETH was acquired below the $1,600 mark to create support, while 6.5 million ETH was purchased at a price above this level to establish resistance. This concentration of ETH positions within a narrow range indicates that traders are agreeing to transact within this range.
Furthermore, IntoTheBlock believes that while bullish traders initially bought the news of the ETF, discretionary sellers took over the narrative shortly after. The report suggests that FTX’s upcoming liquidation of reportedly $3 billion in crypto holdings is a key factor behind the discretionary selling. Recent activity on FTX’s wallets has raised concerns in the market, and it is likely that traders have become cautious due to the impending liquidation.
This sentiment is also reflected in the performance of SOL, another cryptocurrency held by FTX, after the announcement that global payment giant VISA will use the Solana network for payment settlements. While SOL initially jumped by more than 5% to trade above $20, it has since fallen back below $19.5. This suggests that the slow market performance of Ethereum and Solana may be driven by traders being cautious due to the impending liquidation.
In conclusion, despite the positive news of the ETF application, the price of Ethereum has not seen significant gains. The current supply and demand balance, as well as the upcoming liquidation of FTX’s crypto holdings, appear to be factors contributing to the stagnant price movement. Traders are transacting within a narrow range, and caution seems to be prevailing in the market.