- Ethereum ETF sees $48.6 million in outflows amid growing Middle East war.
- Ethereum exchange net outflow suggests investors may be buying the dip.
- Ethereum could bounce off the $2,395 support level as funding rates have remained largely positive.
Ethereum (ETH) trades around the $2,400 psychological level on Wednesday, down over 4% following $48.6 million outflows from ETF investors as the war between Israel, Hamas, Hezbollah and Iran is hurting market sentiment. However, buying pressure from spot traders on crypto exchanges could see the top altcoin bounce off the $2,395 support level.
Ethereum spot traders and ETF investors display mixed sentiment
Ethereum and the larger crypto market declined on Wednesday after Iran directed missiles at Israel on Tuesday, broadening the war between Israel and Hezbollah in Lebanon.
After Israeli officials said they would respond, investors are becoming more cautious and quickly flipping from their risk-on attitude displayed in the past two weeks.
The change in market sentiment is visible in Ethereum ETFs switching from high inflows last week to increased outflows on Tuesday. Following the market decline, the products recorded $48.6 million in outflows. The outflows were dominated by $26.6 million leaving Grayscale's ETHE and Fidelity's FETH seeing an exodus of $25 million — their highest day of outflow since launch.
However, spot traders may not be overly bearish as ETF investors following the ETH exchange flows in the past 24 hours. According to CryptoQuant's data, investors are likely buying the dip, considering ETH has seen an exchange net outflow of nearly 40,000 ETH in the past few hours.
 - All Exchanges (6)-638634914832020134.png)
Ethereum Exchange Netflow
Exchange net flow is the difference between coins flowing in and out of an exchange. Unlike crypto ETFs, outflows indicate rising buying pressure, while vice versa for inflows.
Ethereum could bounce off $2,395 support level
Ethereum is trading around $2,400 on Wednesday, down over 4% on the day. The top altcoin has sustained $63.55 million in liquidations in the past 24 hours, with long and short liquidations accounting for $55.48 million and $8.07 million, respectively.
The sharp price decline following Middle East war tension on Tuesday saw ETH breaking the $2,595 key level and crossing below the 50-day, 100-day and 200-day Simple Moving Averages (SMA).
ETH/USDT 4-hour chart
However, Ethereum funding rates have remained positive despite the price decline, indicating that a larger percentage of derivatives traders are still bullish, per CryptoQuant's data.
As a result, ETH is likely to bounce off the $2,395 support level and stage a move upward. If the war tension persists, ETH will likely break this support level, but buyers could step in, considering the $2,350 level is a crucial demand zone where investors purchased over 52.53 million ETH, per IntoTheBlock's data.
The Relative Strength Index (RSI) and Stochastic Oscillator (Stoch) momentum indicators are in their oversold region, indicating bearish momentum.
A daily candlestick close below $2,207 will invalidate the thesis.
Cryptocurrency prices FAQs
Token launches influence demand and adoption among market participants. Listings on crypto exchanges deepen the liquidity for an asset and add new participants to an asset’s network. This is typically bullish for a digital asset.
A hack is an event in which an attacker captures a large volume of the asset from a DeFi bridge or hot wallet of an exchange or any other crypto platform via exploits, bugs or other methods. The exploiter then transfers these tokens out of the exchange platforms to ultimately sell or swap the assets for other cryptocurrencies or stablecoins. Such events often involve an en masse panic triggering a sell-off in the affected assets.
Macroeconomic events like the US Federal Reserve’s decision on interest rates influence crypto assets mainly through the direct impact they have on the US Dollar. An increase in interest rate typically negatively influences Bitcoin and altcoin prices, and vice versa. If the US Dollar index declines, risk assets and associated leverage for trading gets cheaper, in turn driving crypto prices higher.
Halvings are typically considered bullish events as they slash the block reward in half for miners, constricting the supply of the asset. At consistent demand if the supply reduces, the asset’s price climbs.
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