As Ethereum (ETH) price drops, the cryptocurrency attracts a whopping $274 million. Despite this influx, ETH underperforms compared to Bitcoin and the S&P 500. What does this movement indicate for Ethereum's future?
Despite the recent drop in the price of Ethereum (ETH), the second-largest cryptocurrency has seen a significant influx of liquidity in the past 24 hours. Investors from various channels have massively accumulated this asset, with purchases totaling $274 million. This positive trend is notably driven by buying activity on Layer 2 networks like Base and Arbitrum.
From a technical standpoint, Ethereum has bounced perfectly on its important zone of $2120. In case of further downside, ETH will need to stay above $2000 or risk dropping between $1980 and $1800. The 100-day moving average at $2138 is holding steady for now.
Although this capital influx suggests a potential rebound for ETH early this week, the cryptocurrency has underperformed compared to its major competitors in 2023. While Bitcoin gained 58.1% and the S&P 500 10.4%, Ethereum experienced a 35% decline. This dynamic questions the attractiveness of ETH compared to other asset classes, especially with Bitcoin increasingly establishing itself as a safe-haven asset.
This dichotomy between liquidity inflows and ETH underperformance raises questions about Ethereum’s ability to regain ground against competitors. Investors might consider reallocating their capital elsewhere, favouring assets like Bitcoin or traditional stocks. It will be essential in the coming days to closely monitor investors’ positioning evolution in the overall crypto market.
Charles Ledoux is a Bitcoin and blockchain technology specialist. A graduate of the Crypto Academy, he has been a Bitcoin miner for over a year. He has written numerous masterclasses to educate newcomers to the industry and has authored over 2,000 articles on cryptocurrency. Now, he aims to share his passion for crypto through his articles for InvestX.
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