Ethereum Sees $547M Inflows but On-Chain Activity Declines Below $4,200

TLDR

• Ethereum saw $547M in ETF inflows, signaling strong TradFi positioning.
• BitMine Immersion expanded ETH holdings to $10.6 billion, aiming for 5%.
• Ethereum’s on-chain activity dropped 12% in the last 30 days.
• ETH could face liquidation risks for $1 billion in short positions at $4,350.

Ether (ETH) has struggled to stay above the $4,200 mark despite impressive institutional inflows into spot Ethereum exchange-traded funds (ETFs). On Monday, Ethereum ETFs recorded $547 million in net inflows, signaling ongoing confidence from traditional finance (TradFi). However, ETH’s price continues to face downward pressure from broader market corrections in both crypto and stock sectors, alongside declining on-chain activity within the Ethereum network.

Institutional Interest in Ethereum Continues

Ethereum’s institutional demand remains strong, as evidenced by the $547 million in net inflows into spot ETH ETFs on Monday. This was a shift from the previous week’s trend, which had seen diminished investor confidence. The inflows highlight the continued positioning of traditional finance players who see value in Ethereum for the long term.

Moreover, BitMine Immersion, a notable corporate investor, expanded its ETH holdings to over $10.6 billion, targeting 5% of the total Ether supply. Tom Lee, the company’s chairman, reaffirmed this long-term goal, showing that significant players are betting on the future growth of Ethereum. This institutional interest is a crucial factor for Ether’s future positioning, as companies view ETH as a strategic asset for their portfolios.

Ethereum’s increasing institutional backing is also supported by developments like the partnership between ConsenSys, the Ethereum ecosystem developer, and SWIFT. Over 30 financial institutions are collaborating on cross-border payment systems. Although ETH itself may not directly benefit from the project, the involvement of such prominent players boosts confidence in Ethereum’s long-term viability.

Weak On-Chain Activity Dampens Sentiment

Despite the positive signals from institutional investors, Ethereum has seen a decline in on-chain activity. Data from Nansen indicates that Ethereum’s 30-day fees dropped by 12%, and transaction count fell by 16%. In contrast, some rival networks have seen growth in network activity, which has put additional pressure on ETH.

The drop in fees and transaction volume on Ethereum has raised concerns among traders. These metrics are often seen as a reflection of the network’s usage and overall demand. If the trend continues, it could signal weakening confidence from retail investors, which may further limit ETH’s price upside.

However, this decline in on-chain activity has not deterred all investors. Some analysts believe that Ethereum’s long-term potential remains intact, especially with increasing adoption and future scalability improvements such as Ethereum 2.0. As a result, while short-term volatility persists, ETH’s underlying fundamentals continue to attract long-term investors.

Broader Market Corrections Affect ETH Price Movement

The broader market correction in both cryptocurrencies and stocks has added downward pressure on Ethereum’s price. Following a period of strong growth, the price of ETH has failed to stay above the critical $4,200 level. A broader pullback in risk assets, including stocks, has led to reduced investor appetite for cryptocurrencies.

Despite these challenges, Ethereum bulls remain hopeful that the asset can rebound. Traders are watching closely for ETH to reclaim the $4,800 level, which it last reached on September 13. A rally to this level could lead to the liquidation of short positions, potentially sparking further upward momentum.

Ethereum’s performance in the near term will likely be heavily influenced by broader economic factors, including the outlook for U.S. economic growth. In the short run, traders will remain cautious as they monitor developments in both the crypto and traditional financial markets.

$1.6 Billion in FTX Recovery Trust Funds Could Impact ETH Price

Traders are also anticipating the release of funds from the FTX Recovery Trust, which is set to distribute $1.6 billion to creditors. The third tranche of payments could spark renewed interest in cryptocurrencies, with some recipients likely to reinvest their payouts into digital assets, including ETH.

As Ethereum’s price hovers near the $4,200 mark, market participants are closely watching for any signs of a rebound. The FTX distributions could provide the catalyst needed to trigger renewed demand for ETH, potentially leading to a recovery in price. However, the overall direction of ETH will still depend on the interplay of institutional demand, on-chain activity, and broader market conditions.

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