Key Points
- Ethereum’s price has dropped to $2.6K, indicating a possible end to its correction phase.
- Analysts suggest that key on-chain metrics suggest a potential recovery.
The price of Ethereum (ETH) has recently fallen sharply, reaching $2,664 as of August 19, 2024. This is a 21.30% drop since late July.
However, some market analysts believe that this correction could be nearing its end. They base their predictions on certain key on-chain metrics that suggest a possible recovery.
Positive Shifts in Buyer Strength
CryptoQuant analyst Burak Kesmeci has observed that Ethereum’s taker-buy ratio is turning positive once more. This indicates that buyers are starting to regain their strength. This ratio measures the balance between buyers and sellers across major crypto exchanges. A positive reading suggests that buying interest is returning.
Data from CoinGlass echoes this trend. In the most recent 12-hour window, there were a total of $49.84 million liquidations with $6.91 million long liquidation and $42.94 million short liquidations. This indicates a growing bullish sentiment.
Indications of Market Shifts
Simultaneously, Open Interest (OI) in Ethereum futures, a key indicator that tracks the number of active contracts, rose 10% to $10.69 billion on August 19. This increase suggests renewed trader activity, which Kesmeci believes could lead to a significant upward movement if leveraged players re-enter the market.
Historically, spikes in Ethereum’s OI have signaled important market shifts. For instance, in March 2024, when Ethereum reached its yearly peak of $4,066, OI hit $13.67 billion. A similar spike to over $15 billion was seen when Ethereum retested the $3,800 mark in June, shortly before a sharp correction ensued.
Kesmeci asserts that these patterns suggest we could be approaching the end of the current downturn.
ETF Launch and Market Pressure
The first spot exchange-traded funds (ETFs) for Ethereum launched on July 23 with high expectations. However, the price movement has been disappointing. In the past 28 days, U.S.-based ETH ETFs have seen outflows of $434 million, increasing selling pressure. This situation mirrors what happened with Bitcoin ETFs, which experienced a 15% drop after their launch but later recovered.
While Ethereum’s dip below $2.6K has raised concerns, a combination of strengthening on-chain metrics and renewed trader confidence suggests that this correction may be winding down. Investors are closely watching to see if leveraged traders return to the market, potentially paving the way for a recovery.
