Key Insights
- •Ethereum bulls gain confidence after the ETH/BTC price chart breaks out of a months-long downtrend.
- •ETH ETFs load up as bullish expectations rise, with daily inflows hitting the highest levels since late October.
- •Short-term profit-taking intensifies, risking downside pressure.
The market flashed signs of another flip in favor of Ethereum price rather than Bitcoin about a week ago.
Fast forward to the present, and investor activity confirmed interest in ETH, mostly in the form of higher ETF flow compared to BTC, as well as a major breakout signal.
The ETH/BTC price recently broke out from a descending resistance that has been active since August. The accelerating uptick confirmed the growing interest in ETH relative to the BTC price.
Unsurprisingly, the descending resistance breakout favored ETH price action more than it did for Bitcoin.
The Ethereum-native coin crossed above $3,400 in the last 24 hours, after rallying by more than 11% over the last 7 days.
In contrast, Bitcoin was up less than 3% in the last 7 days, confirming that ETH has been receiving more attention.
Ethereum price is now on its third week of recovery after the bearish phase between August and November.
Ethereum ETF Inflows Surge as Bullish Price Expectations Rise
The ETH/BTC breakout has no doubt boosted ETH investor confidence. ETH ETFs registered $177.7 million in inflows on Tuesday, the highest daily inflow since 20 October.
This latest spike in ETH ETF inflows may indicate that institutional investors are looking to capitalize on the cryptocurrency’s upside. It also aligned with the aforementioned breakout pattern.
Moreover, ETH ETFs also outperformed Bitcoin ETF flows. The latter had about $151 million worth of inflows on Tuesday.
These observations also aligned with the rising ETH dominance. The latter jumped from a weekly low of 11.57% this week to 13% at the time of observation.
The rising bullish confidence around Ethereum price action was also evident among Hyperliquid whales.
One particular whale who accurately predicted the 10 October crash has reportedly executed ETH long positions worth $303 million.
Hyperliquid whale executes $303 million ETH long position / Source: Hyperliquid
But do these bullish signs mean that ETH will extend its rally? Market data also suggests that the cryptocurrency may be at risk of a profit-taking induced selloff, hence underscoring another tug of war between the bulls and bears.
ETH Short-Term Profit-Taking on the Rise, but Will it Dethrone the Bulls?
On-chain data revealed that investors might have a short-term bias, in which case sell pressure may make a comeback. That outcome may already be happening, judging by recent observations.
For starters, whale activity on both the spot and derivatives segment was predominantly focused on downside.
Whales sold off over $77 million worth of ETH in the last 3 days across Binance, Coinbase and OKX.
Whales also executed more than $5.2 billion in short positions on Binance and OKX during the same period.
This suggests that Ethereum price may be headed for yet another pullback if the bears outweigh the bulls.
Beyond the scope of whale activity, the broader market registered over $249 million worth of net outflows on Tuesday.
This was the highest daily net outflows observed so far since the start of December.
ETH open interest surged back above $40 billion this week, suggesting that there was growing appetite for derivatives and leverage.
Ethereum liquidation map revealed that the cumulative long liquidation leverage was roughly $1.40 billion near the $3,200 price level.
For reference, ETH had roughly $860 million worth of short liquidation leverage if the price pushes to the $3,500 level.
In other words, leveraged longs had more to lose than their counterparts, hence incentive for a Ethereum price downside liquidity sweep.