How is Ethereum price influenced by on-chain activity and whale buying?

Ethereum Price Influenced by On-Chain Activity and Whale Buying

The price of Ethereum (ETH), the second-largest cryptocurrency, has been fluctuating significantly in recent weeks, influenced by a combination of on-chain activity and whale buying patterns.

On-Chain Activity Signals Increase

On-chain activity, which refers to the volume and nature of transactions taking place on the Ethereum blockchain, has experienced a notable uptick. According to IntoTheBlock, transaction counts have reached highs of 32 million per week, driven by a significant drop in gas costs on Layer 2 (L2) solutions after the recent Dencun upgrade. This increase in on-chain activity suggests growing usage and adoption of the Ethereum network.

Whale Buying Fuels Price Growth

In addition to increased on-chain activity, whale buying has also been a major factor influencing ETH price. Whales, referring to large investors who hold substantial amounts of cryptocurrency, have been accumulating ETH at strategic intervals. Spot On Chain, a blockchain analytics platform, reported two whales recently purchased 10,322 ETH using a combined $35.11 million in stablecoins, leading to a noticeable price recovery.

Bear Trap Theory Emerges

Despite the recent price volatility, veteran trader Peter Brandt has suggested that Ethereum may be in a “bear trap.” A bear trap occurs when a false technical signal indicates a reversal of a downward trend, potentially attracting investors to buy before the trend resumes its original direction. Brandt believes this is possible due to Ethereum’s strong appeal to investors and the high stakes involved for whales who have invested heavily in ETH.

Analysts Predict Price Recovery

Several market analysts have expressed optimism regarding the future of ETH price. Michael van de Poppe, a popular analyst, considers the current levels an attractive entry point for investments, emphasizing the strategic support zone and ongoing downward trend. Others believe the negative sentiment surrounding Ethereum presents a unique opportunity to acquire the asset at a favorable price.

Technical Analysis and Market Indicators

Technically, ETH price has witnessed a slight upward movement in the past 24 hours, currently trading at $3,426. The surge in futures open interests across exchanges further indicates the potential for a price recovery. However, it is important to note that the cryptocurrency market remains volatile, and investors should exercise caution when making investment decisions.