Ethereum (ETH) has shown signs of recovery after a strong market downturn, with increased activity of whales causing large Ether holders to withdraw funds from exchanges.
After experiencing a nearly 15% drop following the U.S. Federal Reserve's (Fed) interest rate hike decision, Ethereum appears to be finding stability around the $3,400 level.
This stability may be due to investors seizing the opportunity to buy in when the price dropped, as suggested by the outflow of funds from exchanges.
The ETH reserve chart on exchanges has a downward trend, indicating a consistent pattern of investors withdrawing ETH from exchanges, signaling an accumulation phase.
This altcoin's price has dropped more than 22.5% during the market turmoil, breaking the crucial $3,500 support level. However, since then, it has regained its important position, recovering from around the 200-day EMA at $3,100 to above $3,400 at the current time. Analysts say the next support level to watch is $2,850.
Amid the current correction, investors are rushing to buy ETH, with some expressing optimism that this asset will return to the $4,000 level.
The LookOnChain analytics platform reported that ten newly created wallets have collectively withdrawn 17,698 ETH, worth approximately $61.66 million, from Binance.
A few hours earlier, LookOnChain also revealed that four new whale wallets have purchased 8,440 ETH worth $28.43 million from Binance. This large transaction coincided with the time when the ETH price was recovering from the sharp decline.
Institutional investment interest in Ethereum has also surged, as evidenced by the market activity from World Liberty Finance, which is associated with Donald Trump, recently purchasing 759 ETH worth $2.6 million at the current valuation.
The optimistic sentiment surrounding Ethereum is further bolstered by the continuous increase in the amount of staked ETH. According to data from IntoTheBlock, there are currently over 54.7 million staked ETH, supported by more than 206,000 unique stakers. This trend suggests that investors are bullish on the long-term prospects of ETH, committing to holding their positions in the near future.
Ether ETFs have also recorded strong performance, registering seven consecutive weeks of net inflows. Recent data shows a record $1.6 billion in net inflows just in December.
Nate Geraci, the president of The ETF Store, emphasized the significance of these developments in his post on X on December 20, stating that the net inflows into ETH are "catching up to gold ETFs." He also predicted that the inflow of capital will accelerate in the future.
Analysts predict the uptrend could last until 2025, especially if the strong spot ETH performance boosts ETF profits. Furthermore, regulatory approval to generate yield from ETF staking could amplify the appeal of ETH.
Despite the recent market volatility, the long-term outlook for Ethereum remains optimistic. Some analysts predict the asset will reach a peak of $8,800, while more conservative estimates, such as from the asset management firm VanEck, suggest a cycle top of $6,000.
VanEck has also predicted that Bitcoin will reach $180,000 by 2025, indicating a strong upward trajectory even if Ethereum does not significantly outperform Bitcoin.
Ethereum's resurgence comes after it traded around $4,000 before losing momentum. The current recovery phase demonstrates ETH's resilience, with both whales and retail investors taking advantage of the price dip to accumulate the token.
You can view the ETH price here.
Disclaimer: This article is for informational purposes only and not investment advice. Investors should do their own research before making any decisions. We are not responsible for your investment decisions.
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According to CryptoPolitan
