Ethereum may face downward pressure in August, as the institutional and whale support that fueled its rally to a July peak of $3,800 appears to be retreating.
With bearish sentiment silently mounting across the broader crypto market, the leading altcoin now faces a tougher climb back toward the $4,000 mark.
On-chain and derivatives data show a recent trend of decline in activity among the market’s biggest players. For example, open interest in ETH futures contracts on the Chicago Mercantile Exchange (CME) has fallen sharply, closing yesterday at a five-day low of $6.2 billion.
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This drop is notable, as CME’s ETH futures market is primarily used by institutional players seeking regulated exposure to the asset. Therefore, lower open interest signals these investors may be scaling back their ETH positions.
Without continued institutional engagement, the upward pressure on ETH’s price may weaken, increasing the likelihood of short-term corrections.
In addition, whale activity is also tapering off. A review of the coin’s on-chain activity reveals a 339% dip in its large holders’ netflow over the past seven days.
Large holders are whale addresses that hold more than 1% of an asset’s circulating supply. Their netflow tracks the difference between the coins they buy and the amount they sell over a specific period.
When an asset’s large holders’ netflow increases, more tokens or coins flow into major investors’ wallets than are flowing out. This trend indicates that these holders are accumulating the asset, signaling confidence in its future value.
Conversely, when it plunges, it marks a cooling in high-conviction accumulation, weakening short-term price support.
At press time, ETH trades at $3,620, down nearly 10% over the past day. During that period, its trading volume rocketed by 17%, creating a negative divergence. This divergence emerges when rising trading activity coincides with falling prices, signaling intensified selling pressure.
If this continues, ETH’s price could fall to $3,524. A breach below this key support floor could lead to a deeper decline to $3,314.
However, if demand resumes, ETH could regain and climb to $3,859.
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