Key insights:
If Ether reaches $4,350, over $1 billion in short (bearish) positions could be at risk of liquidation.
BitMine Immersion has increased its holdings to $10.6 billion, aiming for 5% of the total Ether supply.
Ether ETFs experienced $547 million in inflows, indicating strong institutional interest despite a decline in onchain activity.
On Tuesday, Ether (ETH) struggled to maintain a position above $4,200, even with high demand for spot Ethereum exchange-traded funds (ETFs) the previous day. Weak onchain activity likely affected investor sentiment; however, firms continue to accumulate ETH as part of long-term strategies.
Traders are now asking if ETH can regain the $4,800 mark last seen on September 13.
On Monday, spot Ethereum products saw a reversal with $547 million in net inflows, indicating a potential restoration of investor confidence. Worries existed that demand for digital assets might drop amid a possible U.S. government shutdown or dim expectations for the artificial intelligence sector.
These worries subsided as it became evident that a partial federal agency closure would likely have minimal long-term impact, as spending usually resumes once operations normalize, according to Yahoo Finance. Meanwhile, interest in technology stocks rose following OpenAI’s announcement of new partnerships with Nvidia (NVDA) and Oracle (ORCL), enhancing broader risk appetite.
As investor risk sentiment improved, demand for cryptocurrencies rose on Monday, fueled by BitMine Immersion’s (BMNR) acquisition of 234,800 ETH for its treasury strategy. The company now holds over $10.6 billion in Ether, with Chairman Tom Lee reiterating a long-term objective of acquiring 5% of the ETH supply.
Ether also received support from a new alliance between Consensys, the Ethereum ecosystem’s developer, and SWIFT, the international banking messaging service. Over 30 financial institutions will collaborate on a prototype for cross-border payments, focusing on enhancing interoperability for tokenized assets.
While ETH may not directly benefit from this initiative since SWIFT facilitates infrastructure rather than actual transactions, Consensys’ involvement likely adds legitimacy and helps keep ETH above $4,100.
ETH faces pressure as Ethereum network activity declines
Despite ongoing accumulation by institutional investors, Ether traders remain cautious. Ethereum’s onchain activity has been decreasing, contrasting some competing networks that are experiencing growth.
According to Nansen data, Ethereum fees decreased by 12% in the last 30 days, while transaction volume fell by 16%. In contrast, BNB Chain experienced a 95% increase in fees, and the HyperEVM network saw a 70% rise during the same timeframe.
Ether bulls are also looking ahead to the anticipated $1.6 billion distribution from the FTX Recovery Trust. The third installment of creditor payments is expected on Tuesday, although it may take up to three business days for funds to reach bank accounts. Analysts foresee that many recipients will likely reinvest in cryptocurrencies.
Related: Hong Kong’s $500M HashKey Fund–How DATs could redefine BTC and ETH treasuries
Data from CoinGlass indicates that if Ether rises to $4,350, nearly $1 billion in short positions could be liquidated. Ether’s position as the second-most favored institutional asset is evident, with $22.8 billion in spot ETF holdings and $55.6 billion in futures open interest, placing it significantly ahead of its competitors.
From a fundamental perspective, Ether seems well-positioned to potentially regain $4,800 as strategic reserve firms persist in accumulating ETH and demand for spot ETFs increases. However, in the short term, sentiment remains heavily influenced by external variables such as the projected U.S. economic growth, casting uncertainty over Ether’s momentum sustainability.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
