Ethereum exchange reserve adds 94,000 ETH as ETF performance continues

• Ethereum ETFs may underperform due to the historic market decline in Q3.
• Ethereum exchange reserve increase could cause selling pressure.
• Ethereum open interest needs to rise to fuel a potential rally.

Ethereum (ETH) rose 1% on Tuesday as ETH exchange-traded funds (ETFs) continued to underperform with another day of outflows. The weak flows of ETH ETFs may be due to their poor historical performance in Q3. Meanwhile, the ETH exchange reserve also increased after the slow price increase.

Daily Market Reasons: Why Ethereum ETFs Underperform, Increasing Exchange Reserves

Ethereum ETFs extended their streak of negative flows to five consecutive days after posting $5.2 million in outflows on Monday.

Flows were dominated by $22.6 million in outflows from Grayscale’s ETHE, bringing the total asset loss since ETH ETFs went live to $2.69 billion. While other issuers saw zero inflows, Fidelity’s FETH and Grayscale Mini Ethereum Trust handled inflows of $7.6 million and $8 million, respectively.

The poor performance of spot ETH ETFs led to concern among investors who had anticipated an outperformance of Ethereum similar to that of Bitcoin a few weeks after the launch of spot BTC ETFs in January. In particular, ETH ETFs have seen only one day of inflows in the last three trading weeks and a cumulative outflow of $573 million since launch.

One possible reason for the underperformance could be the historical decline in risk assets in Q3. Therefore, most analysts suggested that Q3 needs to pass before providing an accurate analysis of the ETH ETF’s performance.

Meanwhile, the Ethereum exchange reserve has seen notable growth, increasing by over 94,000 ETH worth around $220 million in the last 24 hours. An increase in a cryptoasset’s exchange reserve indicates more selling pressure and could lead to price declines. As a result, ETH may face selling pressure in the coming hours.

ETH exchange reserve

ETH Technical Analysis: Ethereum Open Interest Needs to Increase to Fuel Rally Search

Ethereum is trading around $2,360 on Tuesday, up 1% on the day. Over the past 24 hours, ETH has seen liquidations of $22.55 million, with long and short liquidations accounting for $4.69 million and $17.86 million, respectively.

Ethereum succumbed to selling pressure around the $3,400 resistance as it fell immediately after approaching the level. ETH price is also bounded by a downtrend line extending from May to September. ETH needs to break the $3,400 rectangle resistance and the downtrend line to stage a rally towards the $2,817 resistance level. A successful move above this level could see ETH rise towards the $3,230 price level.

ETH/USDT 4 Hour Chart

A daily candlestick close below $2,100 could see ETH crash towards the $1,544 support level.

The Relative Strength Index (RSI) is above the median line at 53, indicating bullish momentum. The Stochastic Oscillator has entered the oversold region, indicating a potential short price correction.

Meanwhile, Ethereum futures open interest (OI) must also increase to provide support for potential price growth.

Open interest is the total number of outstanding long and short positions in a derivatives market.

ETH’s OI has fallen over 38% from an all-time high of $17.09 billion on May 28 to $10.51 billion on Tuesday. During the same period, ETH fell by over 39%. In particular, its OI peaked following the news of the Securities and Exchange Commission (SEC) returning to approve ETH ETFs. Similar upbeat news may be needed to spur long-term traders back into the market.

ETH Open Interest

In the short term, ETH could drop to $2,318 to liquidate $28.33 million worth of positions.