Ethereum shows signs of recovery on Tuesday in the U.S. market after a slight increase in the Coinbase Premium index and inflows into Ethereum exchange-traded funds (ETFs).
The slight increase in U.S. sentiment coincides with rising expectations of an interest rate cut to over 80%.
Ethereum is struggling to find direction after regaining support at $2850.
Ethereum has seen a gradual recovery in U.S. market sentiment over the past few days.
The Coinbase Premium Index, which measures the interest of U.S. investors, rose from -0.12 last Thursday to -0.02 on Monday, according to CryptoQuant data. Although the measure remains negative, the slight increase indicates that these investors are valuing Ethereum higher than they did a week ago.
Coinbase Premium Index for Ethereum. Source: CryptoQuant
Institutional interest in the U.S. is also returning, as evidenced by inflows into U.S. exchange-traded funds (ETFs) for Ethereum, according to SoSoValue data. The products recorded a net inflow of $96.67 million on Monday, marking two consecutive days of positive inflows after eight days of outflows.
Whale wallets drive prices above purchase cost
The recovery sentiment is also evident among whale investors holding 10K-100K Ethereum - particularly after the price of Ethereum dropped below their average purchase cost. In an attempt to push prices back above their average cost, these wallets resumed accumulation, increasing their collective holdings by about 440K Ethereum over the past week.
In contrast, wallets holding 1K-10K and 100-1K Ethereum accelerated distribution as prices approached their purchase cost. These categories distributed 100K Ethereum and 120K Ethereum, respectively, during the same period.
Realized price of Ethereum by balance category. Source: CryptoQuant
At the same time, Ethereum futures contracts maintained a cautious tone, with a net outflow of $4.31 billion over the past seven days, according to Coinglass data. However, interest increased slightly this week, with inflows of $735.46 million over the past three days.
The slight return in U.S. interest rates coincides with a jump in expectations for a rate cut towards the end of last week. The odds of the Federal Reserve (Fed) cutting interest rates at its next meeting in December rose from about 30% last Thursday to over 80% on Tuesday, according to the CME FedWatch tool.
However, it remains unclear whether Ethereum has found a bottom as uncertainty in the macro environment continues. Many market experts expect macro conditions to improve for cryptocurrencies to achieve a significant recovery.
Ethereum price forecast: Ethereum struggles for direction after recovering $2850
Ethereum saw $80.8 million in futures liquidations over the past 24 hours, led by $51.3 million in short liquidations, according to Coinglass data.
Ethereum is struggling to find a direction near the psychological level of $3000 after regaining support at $2850. The leading altcoin may rise to test the upper end of the descending channel if it can break through resistance near $3100, which lies below the 20-day exponential moving average.
Daily chart of Ethereum/Tether
On the downside, Ethereum may find support at the lower end of the channel if it loses the key level of $2850.
The Relative Strength Index (RSI) and Stochastic indicator suggest an upward trend but are still below their neutral levels, indicating a slight pullback in the prevailing bearish momentum.
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