Market veteran Ali Martinez analyzes Ethereum market dynamics in the wake of the spot ETF approval, seeing a rise to $5,000 if a critical level holds.
Ethereum has recently experienced significant price movements following the approval of multiple spot Ethereum exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC).
This milestone has sparked renewed interest and discussions among traders and analysts. Market veteran Ali Martinez took to X to provide an in-depth analysis of the potential impact of the recent development on Ethereum’s market dynamics, calling attention to a shift in market trends.
🧵Was the #Ethereum ETF a “sell the news” event? How low can $ETH go? Let’s dive in! 👇
— Ali (@ali_charts) May 24, 2024
Increased ETH Deposits on Exchanges
Martinez highlighted a surge in Ethereum transfers to cryptocurrency exchanges, noting that such movements often signal increased trading activity. In the past two weeks, more than 242,000 ETH have been moved to exchange wallets.
As a result of this substantial influx of tokens, exchanges now hold 13.69 million ETH as balance, representing 11% of Ethereum’s circulating supply. This increased influx could signal an intent from whales to rebalance their portfolio, take profits or engage in speculative trading.
Ethereum Exchange Reserve | CryptoQuant
One of Ethereum’s co-founders, Jeffrey Wilke, is one whale involved in these transfers. Martinez found that he moved 10,000 ETH ($37.38 million) to the Kraken exchange. This move has added to the speculation that significant stakeholders might be preparing to take profits or adjust their holdings in response to the ETF approval.
Martinez also called attention to the sentiments from industry pundits surrounding the Ethereum market. For instance, Anthony Pompliano, a prominent industry figure, views the approval of the Ethereum ETF as a significant milestone, potentially marking a broader acceptance of the cryptocurrency industry.
If they approve the Ethereum ETF, they are approving the entire industry.
This is the last dam to be broken.
— Pomp 🌪 (@APompliano) May 21, 2024
However, Martinez urges caution, suggesting that the increased deposits to exchange wallets could indicate an impending sell-off or heightened profit-taking activities. Despite the uncertainty, a CryptoQuant report today confirmed that permanent ETH holders recently procured over 100,000 ETH.
Ethereum Support and Resistance Levels
Further, Martinez referenced the TD Sequential. This tool has presented a sell signal on the daily chart, featuring a green 9 candlestick. This signal suggests a potential retracement. Martinez explains that this could lead to a decline possibly extending to four days or initiate a new downward phase before a resurgence of the uptrend.
In addition, support and resistance levels play a crucial role in determining Ethereum’s price movements. According to the In/Out of the Money Around Price (IOMAP) metric, a significant demand zone exists between $3,820 and $3,700.
In this range, over 1.81 million addresses hold 1.66 million ETH. This area could act as a strong support level, potentially preventing a severe price drop amid selling pressure. However, if ETH fails to hold this level, the next support zone lies between $3,580 and $3,462, where 3.13 million addresses bought 1.50 million ETH.
A Possible Ethereum Push to $5,000
On the upside, Ethereum faces a crucial resistance barrier between $3,940 and $4,054, where about 1.16 million addresses previously bought 574,660 ETH. Overcoming this resistance could be challenging, but if Ethereum manages to record a daily close above $4,170, it could invalidate the bearish momentum.
According to Ali Martinez, such a move might trigger a new upward phase, potentially pushing Ethereum’s price toward the $5,000 mark. ETH currently trades for $3,720, down 1.56% today but retains a 20% gain over the past week. Its daily RSI remains below 70, currently at 67 despite the latest uptick.
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