Ethereum experienced some recovery earlier in April, but since mid-month, the currency has struggled at the $1,600 level. The largest altcoin faces challenges due to the selling of major investors and decreasing usage activity, making it unable to replicate Bitcoin's positive momentum.
Institutional selling pressures the digital currency
The recent poor performance of Ethereum prices is largely attributed to the actions of major investors. Reports have revealed that three major entities, including Galaxy Digital, the Ethereum Foundation, and Paradigm, transferred 72,100 Ethereum to exchange platforms.
These movements suggest that selling pressure may be increasing among large institutions, causing discomfort among traders. Additionally, unfavorable on-chain data contributes as another negative factor affecting Ethereum's value.
At the same time, the health of the Ethereum network shows concerning trends. Transaction fees have fallen by 56% in the past week and 88% over the last three months. Net flows from major investors have also dropped by 95% over the last month.
When major investors move Ethereum to centralized platforms and the buying interest remains low, the chances of a short-term rally weaken.
On a positive note for Ethereum, most short positions on futures in the Chicago Mercantile Exchange have been closed, which was previously a significant pressure point. These large short positions were associated with arbitrage strategies involving spot purchases on ETFs and short selling futures up to 2025.
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While this closure does not directly boost prices, it reduces downside risks, creating an environment where positive news could encourage upward movement. Some encouraging factors include increased demand for spot ETFs and the potential for the Federal Reserve to adopt a more moderate approach to interest rate cuts.