Ether (ETH) Price May Witness a Deeper Correction Before Embarking on a Sustained Recovery

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Ether (ETH) slid below the crucial $1,500 support level as its most recent sell-off saw a deeper correction.

According to crypto analyst theKriptolik, ETH price dropped below its realized price, which is a bearish event.

Most analysts suggest that the realized price, which is calculated by adjusting the market value of a cryptocurrency based on the price at which each coin last moved, acts as resistance when it’s above the spot price and places “most holders suddenly in a loss position.”

Onchain analysis: Is ETH price at risk of deeper correction?

The realized price fell below the spot price in June 2022, which was followed by a 51% drop in ETH price following the Terra Luna market crash. A similar scenario was witnessed in November 2022, when the metric fell below the price before Ether dropped 35% following the FTX collapse.

Now that a similar scenario is playing out, the current setup loosely echoes those prior bearish continuation phases, with ETH price at risk of deeper correction.

Despite May gains, lack of institutional demand in Ether ETFs is concerning

According to data from digital assets management firm Farside Investors, there were no inflows into any crypto products in the week ending April 7, with investors pulling funds from both equities and bonds.

This follows a week of moderate inflows, mainly driven by institutional demand for Bitcoin (BTC) and Ether.

However, despite the narrative that institutional demand played a role in the gains accrued in May 2024 as investors bet on an ETF approval from the US Securities and Exchange Commission, this lack of interest in the products is concerning.

According to the report fromlium, this is also reflected across all other Ether products, with flows into Ethereum investment funds aligning with the bearishness seen across the market, with $37.4 million outflows recorded during the week ending April 4.

This is in direct contrast to the inflows of $100 million seen the previous week, which were the highest since December 2021 and followed the approval of several spot Bitcoin ETFs by the SEC.

According to the report, the outflows from digital assets investment products paused this week after seven consecutive weeks of outflows.

Other market weakness: Low open interest and negative funding rates

Another factor putting pressure on Ether’s price is the lack of enthusiasm in its derivatives market, evidenced by low open interest and negative funding rates.

Open interest (OI)—the total number of outstanding futures and options contracts—remains low, indicating reduced trader participation and speculative activity.

Currently, at $16.7 billion, the metric is 48% below its peak of $32.3 billion witnessed on Jan. 24.

Declining OI signals waning investor confidence or interest, which can exacerbate the price decline as buying pressure dries up.

This lack of interest is also reflected in the lack of demand for spot Ethereum ETFs, which saw more outflows on April 8, with over $3.3 million in net outflows from these products.

Over the last two weeks, these investment products have recorded $94.1 million in outflows against $13 million in inflows.

According to the report fromlium, this is also reflected across all other Ether products, with flows into Ethereum investment funds aligning with the bearishness seen across the market, with $37.4 million outflows recorded during the week ending April 4.

This is in direct contrast to the inflows of $100 million seen the previous week, which were the highest since December 2021 and followed the approval of several spot Bitcoin ETFs by the SEC.

According to the report, the outflows from digital assets investment products paused this week after seven consecutive weeks of outflows.

Point of interest: Despite the broader market weakness, inflows into cryptocurrencies continues.

According to the report, the outflows from digital assets investment products paused this week after seven consecutive weeks of outflows.

However, inflows into cryptocurrencies continues, with $244 million in inflows into cryptocurrency exchange-traded funds (ETFs) and other exchange-traded products (ETPEs) over the past week.

This is in contrast to the outflows of $171 million seen the previous week.

According to the report, the inflows into cryptocurrencies were driven by retail demand, as institutional demand remains weak.

According to the report, the lack of institutional demand is a concern, especially since it was considered a key part of Ether’s appeal and played a role in the gains accrued in May 2024 as investors bet on an ETF approval from the US Securities and Exchange Commission.

However, despite the narrative that institutional demand played a role in the gains accrued in May 2024 as investors bet on an ETF approval from the US Securities and Exchange Commission, this lack of interest in the products is concerning.

According to the report