Ethereum rallied alongside the broader crypto market to start the week and is now looking to maintain gains above the $4,000 level.
ETHUSD – Daily Chart
ETHUSD slumped to lows near $3,800 and now requires continued buying to secure the $4,000 level as a medium-term support level.
A positive development for Ethereum has been that holders have taken coins off the exchange, suggesting they are looking to hold for the long term. Over the past week, data from CryptoQuant has shown strong outflows. In the past, these types of moves reduced the immediate supply available for trading and could lead to sharp rallies.
Another positive development has been the increase in volumes on decentralised exchanges, with DEX holdings of Ethereum up 47% over the last seven days to $33.9 billion, from $22.9 billion.
It was a welcome rally for ETH bulls after Ethereum ETFs had recorded more than $795 million in outflows for the week ending September 26th. That was a new record for selling after a level set earlier in the month.
Daily outflows topped out at $250 million on Thursday and Friday, marking the largest two-day sell-off since August. Fidelity’s FETH fund saw $362 million in withdrawals, followed by BlackRock’s ETHA fund, which had more than $200 million in withdrawals.
The recent activity highlights the uncertainty among traders, and there is the risk of headlines that could stop the bull recovery. The first issue is the potential for a U.S. government shutdown after the September 30 deadline.
Cryptocurrencies may follow the lead of stocks over the coming days as the situation develops.
