Ethereum ETF Sees Weak Inflows as ETH Struggles to Reach New Highs

Ethereum (ETH) supply continues to rise, and gas fees have hit an all-time low, causing its price to drop by over 3% on Monday. Last week, Ethereum ETFs saw inflows of only $4.2 million, while U.S. ETFs experienced outflows of $14.1 million, reflecting weak market liquidity. Data shows that ETH’s average daily gas fees fell to 1.06 Gwei, and its burn rate also declined. This reduction in gas fees could negatively impact the price. Technical analysis indicates that ETH may continue to face downward pressure, with the price expected to range between $2,000 and $2,200 in the coming weeks, though a short-term rebound is possible.

As ETH supply continues to increase, Ethereum gas fees hit a historic low on Saturday. Last week, global Ethereum ETF inflows were only $4.2 million, while U.S. Ethereum ETF outflows exceeded $14 million. After breaking the key uptrend line of the ascending triangle, Ethereum may repeat historical price patterns. ETH dropped over 3% on Monday due to weak ETF liquidity and record-low gas fees. This decline coincided with ETH attempting to replicate historical price movements from the past two years.

Daily Market Summary: Ethereum’s Low Gas Fees Align with Weak ETF Flows

According to Ultrasound.money, Ethereum’s average daily gas fees hit a historic low of 1.06 Gwei on Saturday. Gwei is a measure of Ethereum transaction fees.

Since the London hard fork, ETH gas fees have decreased. According to CryptoQuant, lower gas fees also mean that ETH’s burn rate fell to 115 ETH on Saturday. While historically low gas fees often coincide with price bottoms, the market outlook may differ this time due to the Dencun upgrade on March 13.

The Dencun upgrade introduced blobs, allowing Layer 2 networks to post data on the main chain at significantly lower costs. Consequently, ETH’s burn rate, which aims to offset new issuance, continues to decline.

From April to August 2024, Ethereum’s total supply increased by over 220,000 ETH, while its price dropped by more than 30%. If demand falls or remains unchanged, the continuous supply increase could negatively impact ETH’s price. This may be why Ethereum ETFs have not yet influenced the price.

Meanwhile, according to CoinShares, Ethereum ETFs saw net inflows of $4.2 million last week. Despite positive global inflows, U.S. spot ETH ETFs experienced net outflows of $14.1 million. Weak inflows indicate investor caution, as reflected in price volatility and the ETH Fear and Greed Index at 34.

The ETH Fear and Greed Index uses values from 0 to 100 to measure investor sentiment towards Ethereum. A significant rise in the index indicates high greed, while a drop suggests FUD (fear, uncertainty, and doubt).

ETH Technical Analysis: Ethereum Poised to Repeat Historical Key Price Movements

Ethereum traded around $2,570 on Monday, down over 3% for the day. In the past 24 hours, ETH faced $30.8 million in liquidations, with $28 million in long positions and $2.8 million in short positions.

According to CryptoQuant, with funding rates turning negative earlier today, the Ethereum derivatives market indicates that most traders are bearish. Funding rates are periodic payments made by long/short traders when the price of perpetual futures contracts is above/below the spot contract price. They are also used as a sentiment indicator to gauge whether traders are bullish or bearish.

At the time of writing, Ethereum’s funding rate hovered around -0.0036, indicating a dominance of short positions.

The 4-hour chart also shows bearish sentiment, with ETH breaking the ascending triangle’s uptrend line on Sunday. This move suggests sellers are gaining momentum and may initiate a dominant bearish trend.

ETH/USDT 4-Hour Chart

However, the stochastic oscillator on this timeframe indicates that ETH may rebound after falling below the 20 level and entering the oversold zone. On the other hand, the Relative Strength Index (RSI) signals bearishness after breaking below the midpoint and moving averages.

Meanwhile, ETH continues to face resistance near the downtrend line on the daily chart. This trendline, drawn from May 30 to September 29, suggests that ETH may fall to the $2,000 to $2,200 range in the coming weeks before a significant rebound.

ETH/USDT Daily Chart

ETH exhibited similar patterns from August to November 2022 and from July to October 2023. Additionally, the daily chart’s Awesome Oscillator (AO) indicates weakening bearish momentum.

In the short term, ETH may briefly rise to $2,648 to liquidate positions worth $21.12 million.

Disclaimer: This price analysis article serves as reference only and should not be construed as financial or investment advice. Before making any financial decisions, please conduct your own research and consult professionals.

Sentiment: Positive