Ethereum Price News: ETF Inflows Start the Week Strong – Is ETH Ready for $7,000?

Ethereum (ETH) made history just two days ago after hitting a new price record at $4,953 but has failed to make its way above its next key psychological threshold – the $5,000 level.

Trading volumes have been quite high in the past few days as the token retreated off this high and currently account for 11% of ETH’s circulating supply at $63 billion.

So far today, the top altcoin has dropped by 1.14% to stand at $4,536 although it has recovered significantly from its session low of around $4,330 per token.

ETH ETFs Attract $1 Billion in Three Days

A total of $633 million worth of crypto long positions have been flushed out in the past 24 hours, most of which were victims of this early decline. ETH accounts for nearly 31% of that total.

Meanwhile, data from Farside Investors shows that ETH-linked spot exchange-traded funds (ETFs) attracted $444 million on Monday and have lured over $1 billion in capital inflows in the past three days alone.

Spot Ethereum ETFs AUM – Source: The Block

The latest data from The Block shows that assets under management (AUM) by ETH spot ETFs climbed to a new record of $26.8 billion last Friday and should have surpassed the $27 billion mark already as of yesterday based on the latest information from Farside.

This indicates that the market’s sentiment toward this altcoin has not changed despite the latest decline. In fact, investors have kept pouring money into ETH even as the price retreated from its Sunday highs.

Friday was a big day for the market as the Chairman of the Federal Reserve, Jerome Powell, confirmed that the central bank would be ready to make its first interest rate cut of the year.

Analysts surveyed by FedWatch believe that this rate cut will be executed during the next FOMC meeting on September 17. More than 80% of analysts expect a 25 basis point drop in the federal funds rate while only 43% believe that the Fed will cut rates by another 25 basis points during its October meeting.

The combination of positive net inflows across ETH ETFs and this supportive macro environment favors the continuation of Ethereum’s rally and the first and most logical stop for it would be a move above $5,000 in the near term.

ETH Needs a Leg Down Before Its Next Push to $7,000

The weekly chart shows that this retreat can still be considered a minor reaction to hitting a key multi-year resistance. ETH failed to stay above its former all-time high of $4,868, possibly as early buyers have cashed out of their long positions to bank some nice profits.

Hence, this selling pressure is quite natural and expected from a technical standpoint. The Relative Strength Index (RSI) in this higher time frame has just scratched the surface of its overbought mark. Hence, the rally does not seem overheated at this point.

The odds favor a push above $5,000 soon but not necessarily without a strong pullback to ETH’s trend line support before that happens. The market could flush leveraged longs much further to create enough demand for a move of that magnitude.

When a high volume of long positions is liquidated and the market tanks, new buyers step in to open new positions to take advantage of the asset’s lower price. Since the price is making a higher low now, it means that it will start at a higher baseline.

For example, a 20% move off $4,000 gets you to $4,800. Then the price corrects to $4,500. If you get another 20% next, that gets you to $5,400. If a higher low shows up, which could take the form of a trend line support bounce as we mentioned earlier, that could be the starting point for ETH’s next leg up to $5,500 or even $7,000.