Ethereum has recently been surrounded by fear, uncertainty, and suspicion (FUD) following the launch of an investigation into the ETH Foundation by the US government. Despite a tough week that saw Ethereum's price drop to $3,000, the second-largest cryptocurrency by market capitalization has shown strong signs of strength despite bearish sentiment and the regulatory scrutiny it faces. I'm showing it. This is due to several bullish on-chain indicators supporting demand for ETH price.
Ethereum flashes bullish on-chain data
Although the price of Bitcoin (BTC) has fallen to $60,000, it is the Ethereum indicator that has captured the attention of many in the crypto market. Notably, Ethereum recorded a massive net inflow of $720 million to its centralized exchange (CEX), marking the largest weekly net inflow since September 2022. This influx comes amid regulatory FUD brought about by recent enforcement actions.
The Ethereum Foundation is reportedly under investigation by an unidentified regulatory agency. According to Fortune, the investigation is believed to be part of an aggressive legal effort by the U.S. Securities and Exchange Commission (SEC) to classify Ethereum as a security.
However, even amidst this FUD, Ethereum remains strong as seen in on-chain data. According to IntoTheBlock, Ethereum mainnet transfer volume has reached its highest peak since May 2022, and the rise in the daily average suggests early signs of a new bull market. Amid price declines and regulatory hurdles, the patience of long-term Ethereum investors has stood out, with continued accumulation of ETH in long-term wallets reaching an all-time high.
At the moment, Ethereum's net flow is hovering around the negative zone as outflows exceed inflows. Currently, ETH Netflow is -37.8K ETH. This suggests that outflows are exceeding inflows and ETH exchange reserves are decreasing. This could reduce the likelihood of a decline in the stock price in the coming days.
Despite the decline in ETH price, holders continue to accumulate and maintain steady buying pressure as the support level is strongly defended. This could increase buyer confidence in the coming days.
What’s next for ETH price?
Ether failed to break above the 20-day exponential moving average (EMA) of $3,442, leading to heavy selling pressure from traders. As a result, the price of the cryptocurrency has fallen to an important support level of $3,000. At the time of writing, ETH price is trading at $3,291, down more than 6.8% from yesterday's rate.
With the 20-day EMA starting to decline and the relative strength index (RSI) in negative territory below the midline, bearish investors appear to be taking control. Any attempt at recovery is expected to encounter resistance at the 20-day EMA, potentially trapping the ETH/USDT pair in the range between the two moving averages for some time.
If the price falls below the critical $3,000 level, it would indicate that investors could quickly exit their positions and the price could fall to $2,860. On the other hand, a move above the 20-day EMA would signal a return of bullish momentum.
