Key Points
- Ethereum’s price rebounds from a critical support level, driven by increased demand from large investors, following a significant crypto market crash.
- The price recovery is also linked to the general market rebound, with Ethereum’s price expected to maintain bullish momentum into the fourth quarter.
After a major crypto market crash that eliminated more than $1.6 billion from leveraged traders within two days, the price of Ethereum (ETH) bounced back from a significant support level.
The top altcoin rallied over 14 percent in the last 24 hours, trading around $2,514 on Tuesday during the European session.
Driving Forces Behind Ethereum’s Price Recovery
The price rebound of Ethereum was in sync with Bitcoin’s price recovery in the past 24 hours. As a result, the total crypto market cap rallied over 8 percent to reclaim $2 trillion on Tuesday.
The crypto market’s recovery coincided with a rebound in the Asia stock market, led by the Nikkei 225 and the Asia Dow. The European stock market also opened Tuesday with a bullish outlook, led by the FTSE 100 and DAX.
As fear increased among investors, as indicated by Ethereum’s fear and greed index being at 17 percent, long-term investors seized the opportunity to make strategic purchases.
On-chain data reveals that several large investors, or “crypto whales,” made strategic Ether purchases in the past 24 hours from different exchanges. For example, Justin Sun, the founder of the Tron (TRX) network, withdrew 14,884 Ether, worth about $35 million, from Binance in the past 24 hours.
As a result, Sun now holds approximately 392,474 Ether units, worth nearly $1 billion. Notably, Sun announced a $1 billion fund on Monday to reduce market fear and help increase crypto liquidity.
Another large investor was spotted purchasing Ether from HTX after depositing $38 million USDT.
Positive Outlook for Ether ETFs
In the US, spot Ether ETFs had a positive day on Monday, registering a net cash inflow of more than $48 million. Despite significant cash outflows from Grayscale’s ETHE, BlackRock’s ETHA balanced with a net cash inflow of about $47 million.
Notably, apart from Invesco’s QETH and 21Shares’s CETH, the rest of the spot Ether ETF issuers registered a positive cash flow on Monday.
Future Price Expectations
The price of Ethereum has been forming a rising trend since early last year, characterized by higher highs and higher lows in the weekly time frame.
A similar V-shaped rebound to the 2020 Covid-19 crypto crash is expected to happen in the coming weeks and possibly yield the highly anticipated parabolic phase of the macro bull run.
However, if Ethereum’s price consistently closes below the support/resistance level around $2,124 in the coming weeks, the bears will continue to be in control.