Since last week, the inflow of Ethereum ETFs has dramatically reversed, with institutional investors recording a net outflow of -105,000 ETH, ending several weeks of inflows.
This sudden reversal has disrupted the market, indicating that institutional confidence is waning. However, the week started positively, with +16,900 ETH flowing back into spot ETFs, suggesting that demand is recovering.
As of the time of writing, ETH is trading at approximately $4,611, slightly below key resistance levels. The balance between ETF capital inflows and overall market positions may determine the recent price trend of this altcoin.
Is the decrease in on-chain inventory a sign of stronger accumulation?
The ETH reserves on exchanges have decreased by 4.41% to $80.7 billion, indicating that investors are withdrawing their balances from exchanges. This steady decline suggests that the long-term holding trend is strengthening, especially since token withdrawals from exchanges will alleviate short-term selling pressure.
Historically, declines in reserves often coincide with periods of price stability or sustained increases due to reduced supply. Therefore, despite recent market volatility, this trend may reflect an increase in holder confidence.
If this pattern continues, the reduction in liquidity due to large capital inflows or sell-offs may amplify future price volatility, making Ethereum's direction more pronounced.
Does the long-short ratio indicate that the market is overly optimistic?
On the Binance platform, 64.44% of accounts still hold long positions in ETH, while 35.56% of accounts hold short positions, resulting in a long-short ratio of 1.81. This imbalance indicates that most traders expect prices to rebound, thus fueling optimism in the derivatives market.
However, excessive bias can also bring risks, as when the market is 'too crowded with bulls,' merely a price drop could trigger a chain liquidation effect.
However, a strong bias for bulls also somewhat reflects confidence in Ethereum's short-term potential.
Therefore, although bullish sentiment prevails, this imbalance may force traders to remain cautious, particularly if resistance levels hold and lead to significant pullbacks.
Will the liquidation cluster at $4,700 prevent Ethereum's upward trend?
The liquidation chart for ETH shows that liquidations are densely concentrated around $4,700, which creates both opportunities and potential risks.
Breaking through $4,700 could trigger strong buying pressure, thereby driving new upward momentum. Conversely, failing to breach this level may lead to strong selling pressure as leveraged positions get liquidated.
These liquidation clusters highlight key pressure points where market volatility may erupt. Therefore, whether Ethereum can break through this barrier is likely to determine if bullish capital inflows and declines in foreign exchange reserves are sufficient to drive a sustained rise.
The rebound in Ethereum ETF inflows, the decline in foreign exchange reserves, and bullish trader sentiment may be signs of potential strength.
However, the dense liquidation cluster around $4,700 presents a significant barrier. If buying power is strong enough to overcome this barrier, ETH may continue its rebound. Conversely, indecision could expose traders to substantial pullbacks.
The market focus remains on Ethereum and related treasury companies. Ethereum continues to rise and stabilizes near key moving averages, reflecting the buying strength in the market from early to mid-August.
However, momentum has slowed, and it is expected to remain in the range of $4,355 to $4,958, with the possibility of testing the $4,355 moving average again. The subsequent trend will be crucial regarding whether treasury companies can continue to attract capital and shape narratives in the market.
Overall, the main trend of the cryptocurrency market has not changed, and the grasp of technical factors may become an important factor affecting profit and loss.
Today's fear index is 51, maintaining a neutral state.
The market is still in a consolidation phase, and it is expected that we will have to wait for tomorrow's release of unemployment figures and preliminary GDP data for the market to regain some volatility. It is also important to monitor whether Trump's firing of Cook will continue to develop, as challenges to Fed independence may affect investor confidence in the U.S. financial system. If everything is dictated by Trump, with his unpredictable personality, there is a chance that everyone will retreat from the U.S. market, and the crypto market is likely to follow the downward trend of the U.S. stock market in the short term, so caution is still needed.
However, there are currently some signs of a bottom. Even if it tests the bottom again, the probability of a rebound will be relatively high, mainly targeting the harmonious players, and spot traders need not worry and can feel confident in entering the market.
