What roles are institutions playing in driving Ethereum prices
Ethereum is in a bit of a pickle at the moment. After rallying up to $3600 towards the beginning of the month, the asset has hit another ceiling at $3640, a familiar resistance from mid-September.
The resistance has been tested a couple of times in the past week and now ETH is subtly suggesting a potential correction. While no harm has been done to its bullish structure, a drop down to $3000 could be in play due to fundamental reasons, one of them being of high importance, that is institutions.
Ethereum Whales’ Bull-Game remains strong
It is important to note that certain on-chain metrics remain strongly bullish for Ethereum. As per Santiment, the top 10 non-exchange whale addresses continued to accumulate and locked more ETH away than the top 10 exchange addresses, which is a good bullish sign.
Daily active addresses for Ethereum also continued to display bullish divergence as the price of ETH dipped a little since September, but active addresses have continued to rise in the charts. So overall, the on-chain narratives remain positive but a $3000 slide could be lucrative for the long-term picture as well.
What do the Survey and Inflows say?
So according to a recent survey, Digital Asset Bi-Monthly Fund Manager by Coinshares Research, close to 42% of investors regarded Ethereum to possess the most compelling growth curve.
The survey represented close to $440 billion assets under management and one of the common reasons behind Ethereums’ expected growth, was network diversification.
Now, on the flip side, Coinshares recent weekly fund inflows pictured a different scenario.
Data showed that Ethereum registered minor outflows of $13.5 million, which indicated possible institutions cashing out at the moment. While Bitcoin registered strong inflows of $225 million.
Is there a silver lining to this?
Yes, this is where the institutions can actually drive the value down to $3,000, just to push it back up. The plot of accredited investors needs to be understood from a long-term perspective. Unlike retail investors, institutions do not panic in the market, and they are more likely to buy into the asset when it is at a local bottom or in a liquidity zone.
The highlighted bit in the chart is the recent liquidity zone for Ethereum at around $2700-$3000. This could fundamentally be the prime recovery position for Ethereum, as institutions may look to fill their bags in this price range. However, the price may structurally move above as well, so it is essential to Do Your Own Research.