Ethereum Price to Defend $2k Support as Whales Buy ETH ETF Rumor

Ethereum Price to Defend $2k Support as Whales Buy ETH ETF Rumor

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Key Insights:

  • Ethereum (ETH) price has managed to hold up above the $2,200 support as the crypto market downturn intensified this week,
  • On-chain signals highlight rising whale demand across the Ethereum network, despite market-wide sell-offs. 
  • Following Bitcoin spot ETF approval, Ethereum appears to be the next on the agenda for Fund sponsors and the US Securities and Exchange Commission (SEC).

Ethereum (ETH) price is currently trading around $2,200, down 5% within the weekly time frame. However, a closer look at the market trends shows that ETH  has delivered a more resilient performance this week compared to the broader industry average.

On Jan 22, the crypto market suffered a significant downturn as Bitcoin (BTC) prices wobbled below $40,000 for the first time in 50 days. By Jan 26, the global crypto market capitalization had shrunk 7%, with $108.5 billion in valuation wiped out within the weekly timeframe. 

Ethereum (ETH) vs. Crypto Market Cap Performance | Source: TradingView

But, losing 5%, Ethereum price has maintained a relatively more resilient performance than the industry average between Jan 22 and Jan 24.

What are driving factors behind ETH price action this week, and can it hold the $2,200 support? 

Whale Continue Buying ETH Despite Market Downturn  

Ethereum price has managed to keep losses below the 5% threshold this week, while Bitcoin and the global crypto market cap shrunk by up-to 7% respectively before making a mild-rebound.

On-chain data trends suggest that the rising whale trading activity from corporate entities looking to front-run a potential ETH ETF approval has, has been pivotal to ETH’s resilient price performance this week. 

On Jan 23, Ethereum Whale Transaction Count surged above 1,190. A closer look at the chart below shows this was the highest recorded since ETH price raced to a 20-month peak of $2,690 on Jan 11. 

Ethereum (ETH) Price vs. Whale Transaction Count | Source: Santiment

Despite the general market downturn this week, corporate entities continue amassing substantial volumes of ETH. This accumulation trend may be attributed to investors and fund sponsors positioning themselves to acquire Ethereum in anticipation of an imminent ETH spot ETF decision.

In periods of market decline, an uptick in whale transactions positively influences the price of a cryptocurrency in two significant ways. Firstly, it enhances market liquidity, facilitating favorable trade execution for panic sellers. Secondly, it boosts confidence among small-scale retail traders.

These factors have been instrumental as ETH strives to maintain its position above the $2,200 support level amidst widespread market sell-offs this week.

ETH Price prediction: Can Ethereum Price Stay Above $2,000? 

As the speculations surrounding Ethereum ETH approval becomes rife, liquidity and investor confidence remains relatively high.

This seems to have slowed down the selling momentum on Ethereum this week, especially when compared to the broader altcoins market. Coupled with the consistent increase in whale transactions, Ethereum’s price is well-positioned to defend the $2,000 level.

The data from IntoTheBlock’s In/out of the money around price, which categorizes all existing ETH holders based on their entry prices, also supports this perspective.

It reveals that the largest cluster of ETH holders, comprising 8.3 million addresses, accumulated 46.5 million ETH at the highest price of $2,078.

In case Ethereum’s price drops towards $2,100, these holders might engage in rapid buying to prevent falling into net-loss positions and safeguard their positions. This could potentially trigger an immediate rebound in Ethereum’s price.

Ethereum (ETH) Price Forecast, Jan 2024 | Source: IntoTheBlock

Looking at the positive side, Ethereum bulls might counteract the bearish pressure if they can regain the $2,500 level. However, given the current market dynamics, this seems unlikely. As observed, a significant cluster of 3.7 million addresses obtained 7.1 million ETH at the average price of $2,400.

If these holders decide to take modest profits as prices reach their break-even point, Ethereum could undergo another correction phase.

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