ETH’s Road to $10K Runs Through an Inevitable $2K Drop: Analyst

After another correction on Friday morning, the cryptocurrency market began to rebound as the day progressed, with BTC and ETH leading the recovery. Ethereum notably dipped to $3,200 but later surged to almost $3,500, marking a 4.5% increase on the day.

Long-Term Optimism Amidst Short-Term Fluctuations

Despite these short-term fluctuations and ETH’s overall monthly decline, analysts remain optimistic about the asset’s long-term prospects. Ali Martinez, for example, noted that the largest altcoin has the potential to break past $5,000 and skyrocket to the next major milestone of $10,000. To achieve this, however, it might need to experience another significant plunge to clear out weaker hands from the market.

Key Resistance Levels Identified

Fellow analyst CW highlighted that ETH is currently encountering a significant sell wall around the $3,450 mark, which represents the first major obstacle on its path to recovery. If this level is successfully breached, the asset could potentially move towards $3,660, where the next sell wall is situated. The subsequent resistance level appears to be around $4,000, according to their analysis.

Investor Behavior and ETF Outflows

A factor that could potentially impact ETH’s upcoming price movements is the behavior of investors utilizing the US-based spot ETFs. Data from FarSide indicates that seven out of the last eight trading days have experienced substantial outflows. The only day with net inflows was November 6, which saw a modest $12.5 million.

In stark contrast, $219.4 million was withdrawn on November 4, following another $135.7 million on Monday. Cumulatively, the net outflows for the week have reached $507.7 million.

What is particularly concerning about this trend is that BlackRock’s ETF, the largest among the offerings, has accounted for the majority of these net outflows. Outflows from BlackRock's ETF began on October 30 with $118 million, followed by $38.6 million on October 31, $81.7 million on November 3, $111.1 million on November 4, and a significant $146.6 million on November 5.

Despite these substantial withdrawals, ETH investors showed a shift in sentiment on November 6, with a modest $8 million in net inflows. This was followed by a more substantial $34.4 million on Friday. Fidelity’s FETH concluded the business week with a considerable net outflow of $72.2 million, further intensifying the withdrawal trend observed in previous days.