Ethereum (ETH) rose, albeit slowly, to $1,700 at the time of writing on Friday. After a massive decline since mid-May, the smart contract token shows a slight increase in buyers willing to re-engage at lower price levels, which was mainly driven by geopolitical tensions in the Middle East and macroeconomic uncertainty.
Ethereum’s on-chain participation drops as capital outflows continue
The number of addresses actively sending and receiving on the Ethereum protocol averaged 480,000 on Thursday, down from about 554,000, indicating a weak breadth of on-chain activity. This decline is part of a broader cooling, given that active addresses averaged 678,000 at the end of May and 738,000 on April 25.
If Ethereum keeps its rally sustained while active addresses soften, the divergence would suggest that momentum remains uncorrelated by on-chain demand, which could result in a sudden correction.
The derivatives market reflects a lack of on-chain demand, as reflected in futures open interest (OI), which stood at $22.98 billion on Friday, down from $24.40 billion on Monday and $30.95 billion on June 1.
Meanwhile, Ethereum spot exchange-traded funds (ETFs) continued their bearish streak for the third consecutive day, with outflows totaling $16 million on Thursday.
SoSoValue data shows that there were outflows of approximately $41 million on Tuesday and approximately $36 million on Wednesday, reducing the risk appetite for related digital investment products. Cumulative inflows average $11.19 million while net assets average $9.24 million.
Price Analysis: Ethereum’s gains are limited due to weak technicals
Ethereum traded at $1,688, which has a bearish near-term bias as the price remains well below the 50-day, 100-day and 200-day exponential moving averages (EMA) at $2,000, $2,148 and $2,405 respectively.
The Moving Average Convergence Divergence (MACD) histogram remains in the negative territory on the daily charts, while the Relative Strength Index (RSI) is above 30, indicating downside pressure despite an attempt to stabilize from recent oversold conditions.
At the top, initial resistance is aligned with the 50-day EMA near $2,000, followed by the 100-day EMA around $2,148 and the more distant 200-day EMA near $2,405, where sellers are likely to defend the broader downtrend. On the downside, the next notable structural support appears at the Supertrend line near $1,849. Failure to retest the EMAs above will keep rallies limited and leave the pair vulnerable to a fresh selloff before any meaningful ground is formed.
(The technical analysis for this story was written with the help of AI tools.)
Crypto ETF FAQ
An exchange-traded fund (ETF) is an investment vehicle or an index that tracks the price of an underlying asset. ETFs can track not just a single asset, but also groups of assets and sectors. For example, a Bitcoin ETF tracks the price of Bitcoin. An ETF is a tool that investors use to gain exposure to a certain asset.
Yes. The first Bitcoin futures ETF in the US was approved by the US Securities and Exchange Commission in October 2021. A total of seven Bitcoin futures ETFs have been approved, with more than 20 still awaiting regulatory permission. The SEC says the cryptocurrency industry is new and subject to manipulation, which is why it has been delaying crypto-related futures ETFs for the past few years.
Yes. The SEC approved the listing and trading of several Bitcoin spot exchange-traded funds in January 2024, opening the door for institutional capital and mainstream investors to trade the main cryptocurrency. The industry described this decision as a game changer.
The main advantage of crypto ETFs is the possibility of exposure to cryptocurrencies without ownership, thereby reducing the risk and cost of holding assets. Other advantages are a lower learning curve for investors and higher security as ETFs take charge of securitizing the underlying asset holdings. As far as the main drawbacks go, the main drawback is that as an investor you cannot have direct ownership of the asset, or, as they say in crypto, “not your keys, not your coins.” Other disadvantages are the high costs associated with holding crypto because ETFs charge fees for active management. Finally, even though investing in an ETF reduces the risk of holding the asset, price fluctuations in the underlying cryptocurrency are likely to be reflected in the investment vehicle as well.
