Ethereum Sees Surge in Activity Amidst Growing Resistance and ETF Outflows

One of the top cryptocurrencies in the market, Ethereum ($ETH), has seen a huge rise in activity in the market over the past 24 hours.

The quantity of active Ethereum addresses increased by 17%, going from 429,000 to 503,000; this means way more users are engaging way more with the network. We might even say these users potentially show way more interest in the Ethereum network. And all this is happening while the price of Ethereum sits around key resistance levels.

Along with the increase in active addresses, in the last 48 hours, more than 100,000 Ethereum tokens have been sent to exchanges. In the past, this increase in exchange inflows has often been a precursor to some kind of market movement. Why are all these tokens going to exchanges? Most probably, traders are positioning for something and using exchanges as their staging base. I reached out to Ethereum’s team to get comments or context, and they declined. But Opnader, on the Telegram group, said that the “exchange inflows are insane.”

Even with these boosts in activity, Ethereum may be hitting a stiff resistance that could thwart any immediate run-up in its price. The resistance zone stretches from about $2,250 to $2,610, where over 12 million holders own nearly 66 million $ETH. This concentration of holders may be the most powerful Ethereum bears around—ready to either take profits or reallocate—to do just that.

Resistance Zone Looms Large as Ethereum Faces Price Challenges

As Ethereum pushes toward this key area of resistance, the pressure on the cryptocurrency mounts. During the past few months, Ethereum has been building a strong upward trajectory, buoyed by its burgeoning adoption in decentralized finance (DeFi) applications, non-fungible tokens (NFTs), and the broader Web3 space. Yet this zone between $2,250 and $2,610 is sufficiently impervious to price penetration that we might as well consider it a wall, with a substantial number of Ethereum tokens effectively locked up across this range.

More than 65 million $ETH reside in the resistance zone. This means that a sizable group of investors is holding strong at this price level. When the price approaches this level, it also tends to elicit profit-taking that can create downward pressure on the price. If Ethereum flips this price level and can hold it as support, that would be a sign that it can make its next upward move. However, if it cannot flip this level and hold it as support, it might see a temporary pullback.

The present market sentiment regarding Ethereum’s pricing is very critical. We have over 12 million investors who hold amounts of Ethereum that are substantial and in the resistance range. If Ethereum attempts to push up and beyond this level, we will almost certainly see market volatility. And we might see that market volatility in the Ethereum markets themselves if traders who bought in at lower levels try to take profits and in doing so push the price of Ethereum down. And all of this makes the task of maintaining upward momentum across the price of Ethereum that much more difficult.

In the meantime, Ethereum spot exchange-traded funds (ETFs) have been netting a string of outflows, adding yet another layer of uncertainty to the market. On March 11, Ethereum spot ETFs had a total net outflow of $21.57 million, marking the fifth consecutive day of net outflows. This ongoing trend could suggest that institutional investors—who normally use ETFs as a means to gain exposure to the cryptocurrency—are pulling back in response to price moves and general market uncertainty.

These outflows from Ethereum ETFs show that the institutional side of the market is becoming more cautious about holding overall crypto positions. Why are we seeing this? Well, first of all, it’s not just Ethereum ETFs that are seeing outflows; see the two charts below for this week’s updated look at the state of the crypto ETF union.

However, for the first time in a while, the outflows from Ethereum ETFs made a meaningful dent in the AUM figures.

Future Outlook for Ethereum

When Ethereum’s price experiences difficulty breaking into the $2,250 to $2,610 zone, it makes the most sense to keep an eye on how traders are moving in and out of this range. It could be a proto-accumulation zone, where people are gaining long positions in anticipation of a breakout to new highs. But it could also be the setup for a big dump, where Ethereum faces so much selling pressure that it gets forced down to the next support level. Here’s what might happen to the price of Ethereum next.

Ethereum’s long-term outlook is still favorable, and it’s extending its dominance in the DeFi and NFT sectors. In the short run, volatility is a likely outcome as Ethereum does its thing around these all-important resistance zones. Everyone who has a stake in either Ethereum or the other outfits in that smart contracting space will need to maintain a high level of vigilance in the coming days and weeks. Necessary to this vigilance is a close watch over the movement of both active addresses and exchange inflows.

To conclude, we can say that Ethereum is at the crossroads of its price development, with crucial resistance zones and outflows from institutions turning into real challenges. Despite this, the latest price surge has, however, led to a new all-time high in terms of active addresses on the network, which suggests that overall interest in Ethereum seems intact.

What really needs to happen, though, is for Ethereum to start trampling over the aforementioned resistance levels if this whole scenario is to have any legitimacy as a further price rally. What happens next will, without a doubt, affect the prices of other cryptocurrencies.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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