Essential 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 to acquire 5% of the total Ether supply.
Ether ETFs attracted $547 million in inflows, highlighting institutional interest amid a drop in onchain activity.
On Tuesday, Ether (ETH) struggled to maintain its position above $4,200, despite strong demand for spot Ethereum exchange-traded funds (ETFs) the previous day. Weak onchain metrics likely impacted investor sentiment, but companies are still increasing their ETH reserves as part of long-term plans.
Traders are now contemplating whether ETH can recover to the $4,800 level last seen on September 13.
Monday saw spot Ethereum products achieve $547 million in net inflows, reversing the previous week’s trend and indicating a potential change in investor sentiment. Concerns had arisen about digital asset demand declining amid a possible U.S. government shutdown or weaker expectations for the AI sector.
However, those worries were alleviated when it became evident that a partial agency shutdown would likely have limited and temporary effects, as spending usually resumes after operations normalize, as reported by Yahoo Finance. Additionally, interest in tech stocks surged following OpenAI’s announcements of new partnerships with Nvidia (NVDA) and Oracle (ORCL), which further fueled risk appetite.
As investors became less risk-averse, cryptocurrency demand increased on Monday, significantly bolstered by BitMine Immersion’s (BMNR) acquisition of 234,800 ETH as part of its treasury strategy. This brings the company’s Ether holdings to over $10.6 billion, with BitMine Chairman Tom Lee emphasizing their long-term goal of acquiring 5% of the total ETH supply.
Ether also gained traction from a new collaboration between Consensys, the Ethereum ecosystem developer, and SWIFT, the interbank messaging network. This alliance includes more than 30 financial institutions working on a prototype for cross-border payments, aimed at improving interoperability for tokenized assets.
While ETH might not see direct benefits from this initiative—since SWIFT is an infrastructure provider rather than a funds transfer entity—Consensys’ involvement likely adds credibility, helping to keep ETH above the $4,100 mark.
ETH Faces Pressure as Ethereum Network Activity Dwindles
Despite ongoing accumulation by institutional investors, Ether traders remain cautious. Ethereum’s onchain activity has decreased, even as other competing networks demonstrate growth.
Nansen data indicates that Ethereum fees have dropped by 12% over the last 30 days, while the transaction count has fallen by 16%. In comparison, fees on the BNB Chain surged by 95%, and HyperEVM, the network behind the Hyperliquid perpetual trading platform, rose by 70% during the same timeframe.
Ether bulls are also looking forward to the forthcoming $1.6 billion distribution from the FTX Recovery Trust. The third payment tranche for creditors is set for Tuesday, although it may take up to three business days for the funds to reach bank accounts. Analysts anticipate that some recipients will reinvest in cryptocurrencies.
Related: Hong Kong’s $500M HashKey Fund–How DATs could redefine BTC and ETH treasuries
According to CoinGlass data, if Ether rises to $4,350, nearly $1 billion in short positions may encounter liquidation. Ether’s status 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, far surpassing its competitors.
From a fundamental perspective, Ether looks well-positioned to regain the $4,800 mark, as strategic reserve companies continue to accumulate ETH, and spot ETF demand increases. However, in the short term, sentiment appears heavily influenced by external factors like the outlook for U.S. economic growth, leaving Ether’s momentum sustainability in question.
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.
