This week, the cryptocurrency market accelerated the bullish momentum following the 0.5% rate cut by the U.S. Fed.
The Ethereum price showcased a remarkable recovery from the lower levels in the past few months, supported by the broader market interest in risky assets. However, certain key metrics and on-chain data suggest that ETH may face resistance in its attempt to rally towards the $4000 price target. Here's an analysis of the crucial factors that could hinder Ethereum's price surge to $4000:
ETH/BTC Pair Hits 40-Month Low as Bitcoin ETF Flows Outperform
According to IntoTheBlock analytics, the ETH/BTC pair recently dropped to a 40-month low, highlighting Ethereum's underperformance compared to Bitcoin. While BTC ETF flows have mainly remained positive, ETH ETFs have seen significant outflows. This suggests that institutional investors favor Bitcoin's relative stability over Ethereum's higher volatility and risk-reward profile.
If the trend continues, the Ether coin could struggle to drive a high-momentum rally and experience prolonged consolidation.
ETH is trading at its lowest level against BTC in over 40 months
While ETF flows for $BTC have been largely positive, $ETH has experienced mostly outflows. This trend suggests that institutional investors are favoring Bitcoin’s relative stability over ETH’s higher risk, high-reward… pic.twitter.com/Eie6CBZ3c4
— IntoTheBlock (@intotheblock) September 20, 2024
As per the recent analysis by IntoTheBlock, the ETH/BTC pair has hit its lowest levels in the past 40 months. This metric showcases Bitcoin's outperformance in the ETF flows. While institutional investors show a preference for Bitcoin's stability, they seem to be largely uninterested in Ethereum's higher risk-reward profile.
This divergence in institutional interest could hinder Ethereum's ability to sustain a strong rally and might lead to a prolonged consolidation phase.
Rising ETH Supply on Exchanges Fuels Fears of Potential Sell-Off
Another crucial factor that might delay Ethereum's price rally is the rising ETH supply on major cryptocurrency exchanges. According to Santiment, the exchange supply has been steadily growing and reached 21.46 million coins. This massive influx of ETH into exchanges heightens the risk of potential selling, which can limit the asset’s growth potential.
As per Santiment's recent analysis, the ETH exchange supply has reached 21.46 Million coins. This metric highlights a significant flow of Ether coins into the cryptocurrency exchanges.
Usually, such large inflows into exchanges are concerning, as they increase the probability of a sell-off. This factor might limit Ethereum's ability to rally to higher price points.
crucial price resistance levels for Ethereum (ETH) to watch
After analyzing the critical metrics that might hinder Ethereum's rally to $4000, let's now examine the price resistance levels that ETH must overcome to reach its target.
The first line of defense for the bears is situated around the $2800 price level, followed by another resistance zone between $3000-$3050. These levels have previously capped bullish attempts and might hinder Ethereum's further ascent.
On the other hand, if the bulls manage to push through these resistance levels, ETH could be poised for a strong rally towards the $4000 price target.
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