- Ethereum ETF experiences $48.6 million in outflows as Middle East conflict impacts crypto market.
- Net outflows from Ethereum exchanges suggest investors could be buying the dip.
- Ethereum might rebound from the $2,395 support level as funding rates stay positive.
As the Middle East crisis continues to weigh on the crypto market, Ethereum (ETH) trades around the $2,400 mark, down by over 4%. Much of this decline comes in the wake of a $48.6 million outflow from Ethereum ETFs amid the escalating conflict involving Israel, Hamas, Hezbollah, and Iran. However, the emergence of buying pressure from spot traders on crypto exchanges could see Ethereum bounce off its key support level of $2,395.
Mixed Sentiment Among Ethereum Spot Traders and ETF Investors
On Wednesday, Ethereum and the broader cryptocurrency market faced a decline after Iran launched missiles at Israel, intensifying the ongoing conflict between Israel and Hezbollah in Lebanon. Following Israel’s announcement of a potential counter-response, investor sentiment quickly turned cautious, moving from a previous risk-on stance seen over the past weeks.
This shift is evident in the switch from high inflows to significant outflows in Ethereum ETFs recorded on Tuesday. A total of $48.6 million was withdrawn from these funds, with Grayscale’s ETHE seeing $26.6 million in outflows and Fidelity’s FETH losing $25 million—the highest daily outflow since their inception.
In contrast, spot traders appear to be more optimistic. Data from CryptoQuant indicates a net outflow of nearly 40,000 ETH from exchanges over the past 24 hours, suggesting that investors are actively buying the dip.
Ethereum Exchange Netflow
The net flow of Ethereum on exchanges, which measures the difference between inflows and outflows, suggests increasing buying pressure despite ETF outflows. Typically, outflows from exchanges are a bullish sign, indicating that traders are withdrawing their assets with intentions of holding them.
Potential Rebound from $2,395 Support Level
Currently trading around $2,400, Ethereum has seen a sharp decline of over 4%, with liquidations totaling $63.55 million in the past 24 hours. This includes $55.48 million in long positions and $8.07 million in short positions.
Tensions in the Middle East have significantly affected Ethereum’s price, causing it to drop below key levels and the 50-day, 100-day, and 200-day Simple Moving Averages (SMA).
ETH/USDT 4-hour chart
Despite this price decline, Ethereum’s funding rates have remained positive, according to CryptoQuant data. This suggests that a majority of derivatives traders maintain a bullish outlook.
Given these factors, Ethereum might find solid support at the $2,395 level and could potentially stage an upward move. If the geopolitical tensions worsen, ETH could break below this critical support level. However, the $2,350 level remains a strong demand zone where buyers previously accumulated 52.53 million ETH, as per IntoTheBlock’s data.
Technical indicators such as the Relative Strength Index (RSI) and the Stochastic Oscillator (Stoch) are in oversold territory, pointing to bearish momentum.
A daily close below $2,207 would invalidate this bullish scenario.
Ethereum FAQs
Ethereum is a decentralized open-source blockchain offering smart contract functionality. Its native currency, Ether (ETH), is the second-largest cryptocurrency and the leading altcoin by market capitalization. Ethereum is designed for creating solutions like decentralized finance (DeFi), GameFi, non-fungible tokens (NFTs), and decentralized autonomous organizations (DAOs).
Ethereum allows developers to build and deploy decentralized applications that operate without a central authority. This is facilitated by the Solidity programming language and the Ethereum virtual machine, which enables the creation and execution of smart contracts.
Smart contracts are self-executing codes that automate agreements between parties. These contracts automatically execute predefined actions when specific conditions are met.
Staking involves earning yields on crypto assets by locking them in a protocol for a set period to support network security. On September 15, 2022, Ethereum transitioned from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) mechanism, known as “The Merge.” This shift aims to enhance Ethereum’s scalability, decentralization, and security while maintaining sustainability.
Gas fees are transaction costs users pay for actions on the Ethereum network. During high network congestion, gas fees can spike, causing validators to prioritize transactions based on their fees.
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