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Ethereum price dropped toward $2,600 on Oct. 7 as the recent recovery lost momentum. ETH traded near $2,617 after retreating about 6.7% from its recent $2,806 high.
The decline came alongside heavy ETF redemptions and leveraged liquidations. Elevated U.S. Treasury yields also remained a broader risk for cryptocurrency and other non-yielding assets.
ETH ETF Outflows Have Jumped
Ethereum price has suffered a big reversal as demand has continued waning following the substantial gains in September. This retreat has coincided with the ongoing weakness in the crypto market, with Bitcoin and Ethereum being in the red.
SoSoValue data shows that American investors have continued selling their ETH holdings in the past few days. These funds had outflows of $201 million on Tuesday, the biggest increase since September 16 when they experienced over $224 million in redemptions.
Spot Ethereum ETF outflows have continued in the last six consecutive days. In total, these funds have shed over $404 million in this period, with the cumulative net inflows since inception rising to over $13.5 billion.
Most of the outflows have come from the iShares Ethereum ETF (ETHA), which shed over $201 million in assets on Tuesday. It now holds $9.6 billion in assets under management (AUM).
Rising ETF outflows is a sign that demand among institutional and retail investors has continued to wane. In most cases, falling ETF inflows and outflows lead to lower prices.
At the same time, the futures open interest has continued falling this month. The daily figure dropped from over $36 billion last month to the current $33 billion.
Ethereum price has also dropped because of the ongoing liquidations. Bullish positions worth over $157 million were liquidated today, the biggest increase since September 15 this year.
Ethereum liquidations | Source: CoinGlass
ETH is Falling as Bond Yields Rise
A likely reason behind the ongoing Ethereum price retreat is the fact that US bond yields are rising. The ten-year yield, which is widely seen as the world’s benchmark, rose to 5.3%, its highest level since 2002. Similarly, the five-year and three-month yields have risen to 5.05% and 4.17%.
The rising bond yields have led to jitters in the market, potentially with investors rotating to Treasuries. This also explains why gold and silver have remained under pressure this week.
There are concerns that yields will continue rising because of the rising US public debt and the fact that some top holders, like China and Japan, may sell their holdings.
Other global bond yields are rising, with the French ones nearing the important milestone of 5%, up sharply from the year-to-date low of 3.21%.
Another potential reason for the weakness is likely that investors are rotating back to technology companies. Nvidia stock has jumped to a record high, while the S&P 500 Index has continued its relentless rally.
Ethereum Price Prediction: Technical Analysis
The daily chart shows that ETH price dropped to $1,516 and formed a double-bottom pattern. This pattern triggered a rebound, eventually reaching a high of $2,806 on September 21.
On the positive side, the coin has remained above the Supertrend indicator. It also formed a golden cross pattern, a common continuation sign.
The coin appears to be attempting to retest the crucial support level of $2,461, its April high. Therefore, there is a likelihood that it will remain under pressure in the near term, and then rebound. A sustained rally will be confirmed when it jumps above the crucial resistance level of $2,806. A move above that level will point to more gains to $3,000.
This article is for informational purposes only and does not constitute financial or investment advice. ETF flows, liquidations, interest rates and technical levels may change as market conditions evolve.
