Ethereum dips below key level as Hong Kong ETFs underperform

While a few whales are dumping ETH following its recent price decline, exchange supply data shows most investors are bullish.
Hong Kong spot Bitcoin and Ethereum ETFs underperform issuers' expectations on the first day of trading.
Ethereum liquidations have exceeded those of Bitcoin.

Ethereum (ETH) experienced a further decline on Tuesday following a disappointing first-day trading volume for Hong Kong's spot Bitcoin and ETH ETFs. This comes off the back of increased long liquidations and mixed whale activity surrounding the top altcoin.

Daily digest market movers: Whale activities, Hong Kong's ETH ETFs, liquidations

Ethereum’s decline has triggered increased long liquidations in the past 24 hours. Here are key market movers for the largest altcoin:

Asset manager Grayscale transferred 5,626 ETH worth $17.83 million to liquidity provider Flow Traders on Tuesday, according to data from Lookonchain. Grayscale has transferred ETH to Flow Traders four times in the past three months, totaling 23,178 ETH worth $71.3 million.

Grayscale transferred 5,626 $ETH($17.83M) to #FlowTraders 4 hours ago.#Grayscale has transferred $ETH to #FlowTraders 4 times in the past 3 months, totaling 23,178 $ETH($71.3M).https://t.co/SxhLpi2DyY pic.twitter.com/6NLDkUSvDW
— Lookonchain (@lookonchain) April 30, 2024
While a few whales may be selling in the short term, Glassnode data reveals ETH's exchange supply has declined and is dropping even faster than Bitcoin. This aligns with several whale activities in the past three weeks as exchanges like Binance have experienced massive ETH withdrawals. Hence, most investors may be holding on to Ethereum with the expectation of a rally in the long term.

Glassnode: Ethereum's exchange supply drops faster than Bitcoin's. Investors hoard ETH for the long haul, predicting a bullish surge. Ethereum set to dominate the altcoin rally!

Focus on the big picture, not short-term noise. pic.twitter.com/sJMcpx2jP2
— Kyledoops (@kyledoops) April 30, 2024
Founder of Tron blockchain Justin Sun, who has been linked with several whale ETH purchases since March, shared his thoughts on the Ethereum staking and restaking boom.

He shared that restaking and staking protocols have made significant progress and will spin off into operating entities to support blockchain networks worldwide. Several crypto community members highlighted that this may be the reason for his potential ETH buying spree in the past weeks.

Also read: Bitcoin, Ethereum Spot ETF in Hong Kong sees underwhelming response with $12 million in trade volume

Despite high projections by issuers for Hong Kong's spot Bitcoin and Ethereum ETFs, they underperformed widely, bringing in a total trading volume of about $12 million on their first day. This is barely a pinch compared to the $4.6 billion first-day trading volume of Bitcoin ETFs—383 times higher than that of Hong Kong.
Following ETH's further decline on Tuesday, its liquidations have exceeded Bitcoin's for the second consecutive. Ethereum has seen a total of $91.76 million in liquidations compared to Bitcoin's $68.51 million. The market decline is hitting hard on ETH long traders, who have experienced $73.62 million in liquidations.

ETH technical analysis: Key level could prove strong to prevent further decline

Ethereum saw another day of increased decline as prices slipped below the $3,000 key level on Tuesday. Considering the market has been waiting on a price trigger since the week began, the disappointing trading volume of Hong Kong's spot BTC and ETH ETFs caused the sharp decline.

Also read: Ethereum cancels rally expectations as Consensys sues SEC over ETH security status

While short-term price movement indicates more decline, exchange withdrawals from long-term bulls could be a strong support to prevent a decline below the $2,852 key level.

ETH/USDT 4-hour chart

Hence, if ETH fails to break below this level, it may bounce up to fill up recent market inefficiencies. ETH's recovery from this descent could see it break past the $3,300 key level to tackle inefficiencies at the $3,454 level formed on April 12. This thesis may be invalidated if a key macro event significantly affects the crypto market.

Cryptocurrency prices FAQs

How do new token launches or listings affect cryptocurrency prices?

Token launches like Arbitrum’s ARB airdrop and Optimism OP 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.

How do hacks affect cryptocurrency prices?

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.

How do macroeconomic releases and events affect cryptocurrency prices?

Macroeconomic events like the US Federal Reserve’s decision on interest rates influence risk assets like Bitcoin, 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.

How do major crypto upgrades like halvings, hard forks affect cryptocurrency prices?

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. This has been observed in Bitcoin and Litecoin.

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