Ether Reclaims $3K as Seller Fatigue Sets In Ahead of ETF Launch

Ether (ETH) surged past $3,000 during European trading hours, reflecting renewed investor confidence and signs of seller fatigue.

Market Recovery and Seller Exhaustion

Ether’s price charts indicate seller exhaustion near the long-standing support level of $2,800. After a nearly 20% drop over four weeks leading up to July 5, the ether market is showing signs of a bullish turnaround. Early Monday, Ethereum’s native token rose over 4% to $3,050, bouncing off crucial support levels.

Indicators Signal Positive Momentum

The recent recovery is supported by indicators reflecting demand and investment sentiment, suggesting ether may have bottomed out ahead of the upcoming debut of spot ether ETFs in the U.S. this month.

No More Discounts on Coinbase and Grayscale

Ether is no longer trading at a discount on Coinbase compared to Binance, signaling seller fatigue and a potential price bottom. CryptoQuant’s ether premium index, measuring the gap between Coinbase’s ETH/USD and Binance’s ETH/USDT pairs, has moved to neutral from a deep discount of -0.19 at the end of June, indicating reduced selling pressure from U.S. investors.

Similarly, the Grayscale Ethereum Trust (ETHE) discount to net asset value (NAV) has disappeared for the first time in over two years, reflecting increased investor confidence and demand for ether-related investments. This change coincides with the SEC’s approval of 19b-4 forms for spot Ethereum ETFs from various issuers on May 23, 2024. Although issuers still need their S-1 registration statements to become effective before trading can commence, the elimination of the NAV discount indicates expectations of imminent SEC approval for Ethereum ETF trading, potentially around mid-July.

Anticipated ETF Impact

Observers predict that the introduction of Ethereum ETFs will unlock billions in investor demand for ether and boost awareness of its parent blockchain, Ethereum. Analysts at IntoTheBlock have estimated that potential demand for the ETH ETF could result in inflows around 30% of those experienced during the BTC ETF introduction, which saw $5 billion in net inflows in its first five months.

Key Support Levels Defended

While price recoveries are common in bearish trends, ether’s rise above $3,000 is notable because it followed a successful defense of the crucial $2,800-$2,850 support zone. Buyers have consistently defended these levels since mid-April, establishing them as key support. Long-tailed daily candles at this support level since Friday suggest that sellers have lost momentum.