Ethereum investors shed holdings following potential SEC admission on ETH’s security status

• The SEC may have confirmed that Ethereum is not a security following the eToro settlement.
• Ethereum faces heavy selling pressure from investors as exchanges witness inflows of 91.4k ETH.
• Ethereum could rise to $3,360 if it breaks the upper trend line of a bearish wedge with strong buying pressure.

Ethereum (ETH) rose 0.5% on Thursday after speculation that the Securities and Exchange Commission (SEC) confirmed that the leading altcoin is not a security. Meanwhile, ETH is experiencing heavy exchange inflows, indicating increasing selling pressure among investors.

Daily Market Reasons: Potential Ethereum SEC Admission, Exchange Flows

Crypto community members are speculating that the SEC has recognized that Ethereum is not a security of value following its deal with crypto exchange eToro. The exchange removed tokens that the SEC deemed “investment contracts” from its platform, allowing users to trade only Bitcoin, Bitcoin Cash and Ethereum.

Given that the SEC did not include Ethereum in the list of tokens it asked eToro to remove, many concluded that it was confirmation that the number one altcoin is not a value asset.

“They (SEC) have just admitted that ETH is not being offered as collateral for an investment contract in the secondary markets,” said Paul Grewal, Coinbase’s chief legal officer.

Following the news, Hong Kong digital asset manager Metalpha resumed potential Ethereum sales after depositing 6,999 ETH worth $16.4 million to Binance in recent hours on Lookonchain. The asset manager has depleted its ETH holdings in the past six days by 62,588 ETH worth $145.1 million. The company still has 23.5K ETH worth $55M to initiate further selling pressure.

Net Ethereum exchange flows show that Metalpha is not the only entity that can sell its ETH tokens. In the past 24 hours, exchanges have seen over 91.4K ETH in net inflows, according to CryptoQuant data.

ETH exchange net flow

Net exchange flows are the difference between currencies entering and exiting an exchange. Unlike exchange-traded funds (ETFs), cryptocurrency inflows indicate strong selling pressure and vice versa for outflows.

Meanwhile, Ethereum ETFs saw slight net outflows of $500,000 on Wednesday. In particular, Grayscale’s ETHE recorded a second consecutive day of zero flows – the first since the launch of the ETH ETF.

ETH Technical Analysis: Ethereum Needs to Break Out of Bearish Wedge to Start Rally

Ethereum is trading around $2,350 on Thursday, up 0.5% on the day. Over the past 24 hours, ETH has seen liquidations of $14.73 million, with long and short liquidations accounting for $9.98 million and $4.75 million, respectively.

On the 4-hour chart, Ethereum is trading in a bearish wedge represented by an upper downtrend line from July 31st and a lower trendline from August 7th. If ETH breaks above the upper trend line of the wedge with increased volume, it could see a massive rally towards the $3,366 level. A potential confirmation of the bullish move will be a retest of the trend line as a new support level.

ETH/USDT 4 Hour Chart

On the way up, ETH faces key resistance around the $2,817 level. A breakout above this level could reinforce the bullish move as it has served as key price support for over four months.

The Relative Strength Index (RSI) and Stochastic Oscillator (Stoch) are slightly above their neutral levels, indicating a slight upside.

A daily close of the candlestick below the $2,111 price level will invalidate the bullish thesis.

In the short term, ETH could rise to $2,388 to liquidate over $32 million worth of positions.