- Ethereum’s performance in the current bull cycle has shown a mix of historical divergences and renewed investor confidence, supported by on-chain data.
- The potential launch of ETH ETFs and regulatory decisions will play a crucial role in determining its future market trajectory.
Ethereum’s journey in the latest bull cycle has been marked by notable divergences and promising signs, offering key insights into its potential future movements.
Divergent Market Patterns
Historically, Ethereum’s price trajectory has shown a distinct pattern following Bitcoin halving events. According to Glassnode data, ETH’s market performance in the first year after a Bitcoin halving has often diverged from that of Bitcoin. For instance, after the 2016 halving, ETH experienced a significant 45% drawdown before rallying 3,400%. Similarly, post-2020 halving, ETH surged 150% initially, followed by a remarkable 2,150% increase. However, since the latest halving in April, Ethereum’s price has remained relatively flat.
Despite these fluctuations, over 90% of Ethereum’s supply has been in profit since January. This sustained profitability often signals the later stages of a bull cycle, where investor profit-taking typically outweighs demand, potentially capping significant price rises.
Growing Investor Confidence
Ethereum investors are gradually regaining confidence, spurred by the anticipation of ETH ETFs. On Friday, Ethereum was up 0.3%, trading around $3,135. The market observed a slight price decline to $3,060, causing liquidations worth over $40 million. Interestingly, Ethereum’s liquidations surpassed Bitcoin’s, despite its lower market cap, indicating a possible fresh upside move for ETH.
The ETH options Open Interest (OI) plummeted to $5.16 billion on Monday, marking the lowest level in a year. This decline reflected increased uncertainty among traders as ETH’s price dipped below $3,000. However, a subsequent slowdown in bearish pressure and a modest price rebound saw ETH options OI climb back to near $6 billion by Friday, hinting at renewed trader confidence. The rising Long/Short Ratio, now at 1.04, further supports this trend.
Market Outlook
The potential launch of Ethereum ETFs, coupled with the heavy selling pressure on Bitcoin from various sources, could lead investors to reallocate their capital into ETH. However, the SEC’s delay in approving spot ETH ETF registration statements might hinder significant price increases in the short term.
Consequently, Ethereum’s price is expected to follow a horizontal trend within the $2,852 to $3,300 range, with a slight upward tilt until the SEC provides clarity on ETH ETFs. According to Coinglass data, ETH might dip to around $3,041, where there is a liquidity wall of $35.57 million, before rebounding.
Ethereum’s performance in the current bull cycle highlights a mix of historical divergences, sustained profitability, and growing investor confidence. While the immediate outlook remains cautious, the potential for upside movement exists, contingent on market conditions and regulatory developments.
