ETH breakout and accumulation surge: key signals to watch
ETH breakout and accumulation surge: key signals to watch
Ethereum is on the move again, with its price now sitting at $2,735 (as of October 21, 2024). Traders are eyeing the next resistance at $2,800, but beneath this price action lie some mixed signals. Long-term investors are stacking up, and accumulation addresses are rising rapidly. Yet, there are concerns on the horizon that may suggest caution in the short term.
Ethereum has broken out of a converging triangle consolidation pattern after nearly a week of little to no price movement. The breakout pushed the price up by 19% from the October low, with an 8% gain just last week. While this looks like a bullish signal, the daily RSI is now sitting above 70, signaling overbought conditions. This overextension might prompt a short-term pullback.
From a fundamental viewpoint, on-chain data reveals long-term confidence in Ethereum.
According to CryptoQuant's reports, accumulation addresses—those that store Ethereum without making withdrawals—now hold over 19 million ETH, a 65% jump since the start of the year. The accumulation is partly attributed to the enthusiasm around the launch of spot Ether ETFs back in July, though net outflows from these ETFs have reached $467.3 million.
At the same time, Ether futures markets are heating up. The addressable futures market has surpassed 5 million ETH, marking a 12% jump over the past month. Historically, a sharp rise in leveraged positions has often preceded significant price corrections.
Ethereum technical and on-chain data analysis
The breakout from the consolidation pattern aligns with broader macro signals of long-term investor confidence. The fact that accumulation addresses have increased by over 11.5 million ETH since January is a strong vote of confidence in Ethereum’s long-term potential, particularly as institutions become more involved. This accumulation helps support the current price level.
However, net outflows from Ether ETFs, concerns over the rising supply of ETH and the rapid rise in Ether futures demand could put downward pressure on the altcoin price in the near term. These red flags could see the $2,800 resistance level as a ceiling if the market does not gather enough momentum.
Ethereum's supply dynamics largely depends on the current trends in Kraken restaking. As a result, the altcoin tends to become more inflationary than before.
