Key insights:
Ether surged 75% against Bitcoin in Q3, yet it has shown slight underperformance in September.
Participation from retail investors has remained low, creating a gap compared to institutional investments.
In Q3, Ether (ETH) saw a 75% rally relative to Bitcoin. Despite a recent pause in price movements, traders remain optimistic about the altcoin reaching $5,000 by 2025.
Data from Glassnode shows that interest among futures traders predominantly focuses on Ether, maintaining an open interest dominance of 43.3%, the fourth-highest recorded, while Bitcoin sits at 56.7%. Additionally, Ethereum’s perpetual futures volume dominance reached a new peak of 67%, marking the largest shift of trading activity towards Ether ever.
Moreover, CryptoQuant analyst Crazzyblockk pointed out the crucial condition for a potential Ether breakout. The analyst believes that regaining the $4,580 level, linked to accumulation and exchange outflow cost bases, is essential.
Recently, over 1.28 million ETH, valued at over $5.3 billion, has been transferred to long-term accumulation addresses, and a successful reclaim could shift market sentiment and open the pathway for a $5,000 breakout.
ETH has found support near $4,100, aligning with the average cost basis of actively trading addresses.
Related: Last chance for Ethereum? ETH price pattern breaks down as $4K must hold
Institutional demand drives down Ether supply, but is retail trailing behind?
Recent Ether demand has primarily been fueled by institutional investors, leading to a decrease in circulating supply. US spot ETH ETFs have observed an increase in total net assets from $10.32 billion in June to $27.48 billion in September, adding over $17 billion across July and August.
Further institutional demand has arisen from Strategic Ethereum Reserves, spearheaded by Bitmine and SharpLink, with allocations soaring to 12,029,054 ETH by Sept. 23 from 5,445,458 ETH on July 1, marking a 121% increase, currently worth around $46 billion.
Despite the substantial institutional acquisition, retail participation seems to be declining. Net taker volume on Binance has remained negative over the past month, with the trend peaking in late September, indicating continued sell-side pressure amidst increasing altcoin enthusiasm.
The spot taker CVD (Cumulative Volume Delta) indicator, which tracks the cumulative disparity between market buys and sells over 90 days, has consistently remained in a sell dominance phase since the end of July. This trend indicates that retail traders have been selling ETH more than buying, emphasizing the growing divide between institutional accumulation and retail activities.
Should retail flows turn positive and the spot taker CVD shift to a buy-dominant phase, ETH may undergo a retail-driven rally, which could complement the current institutional accumulation and expedite broader market momentum.
Related: Ethereum bulls tout supercycle, but Wall Street is skeptical
This article does not constitute investment advice or recommendations. All investments and trading activities involve risk, and readers should conduct their own research before making any decisions.
