Ethereum experienced a significant price drop below $3,000 on May 2, 2024, after failing to capitalize on a 9% weekend recovery that had pushed ETH to a high of $3,300 on April 28. However, recent activity by large investors offers a glimmer of hope.
Ethereum Price Falters Following Fed Rate Announcement
Over the weekend of April 27 to April 30, Ethereum saw signs of a recovery as the bulls managed to achieve a 9% increase in price. Unfortunately, they were unable to sustain this demand surge, leading to a 14% decline in the last 48 hours. As a result, Ethereum’s price fell below $2,820 for the first time in 75 days.
Reasons Behind Ethereum’s Price Movement
The recent 14% decrease in Ethereum’s price can be attributed to a lackluster announcement from the US Federal Reserve. On May 1, the Fed announced that it would maintain its monetary rates unchanged, while expressing the desire to achieve a 2% inflation rate target. Despite the US inflation rate remaining above 4%, many risk asset investors, including Blackrock CEO Larry Fink, have predicted multiple rate cuts in 2024.
Unsurprisingly, the Fed’s decision to freeze rates further intensified the bearish sentiment in the crypto market. Within 24 hours of the announcement, ETH’s price plummeted to a 75-day low of $2,815.87.
Whale Investors Increase Holdings as ETH Dips Below $3k
Despite the negative market sentiment, recent movements by Ethereum’s whale investors provide some hope. Data from Santiment shows that the top 1,000 Ethereum wallets held a total of 75.11 million ETH as of April 28. Despite the 16% decline in prices since then, these whales have not given up. Instead, they have taken advantage of the price dip to increase their holdings.
As of May 2, the cumulative balance held by Ethereum whales has increased to 75.17 million ETH, reflecting a growth of 6,000 ETH in the last three days. With the current price of around $2,995 per coin, these investors have effectively invested approximately $18 million this week.
The significant buying pressure from whales during a market downturn can help maintain relatively high support levels for the asset’s price and potentially trigger an early rebound phase. Additionally, since a majority of the top 1,000 Ethereum wallets belong to ETH 2.0 stakers, some of these coins may be temporarily out of the short-term market supply. This could reduce the selling pressure on Ethereum in the coming days.
Short-Term Rebound Expected for Ethereum Price
Considering the $18 million investment by Ethereum whales this week, it is likely that ETH’s price will experience a rebound towards $3,200 in the near future. GIOM data from IntoTheBlock supports this bullish outlook, indicating that the bulls have successfully prevented a decline below $2,800 and can now focus on a rebound phase. However, Ethereum must first overcome the sell-wall at the $3,100 level.
If the 10.43 million addresses that acquired 10.22 million ETH at an average price of $3,107 decide to sell, ETH may struggle to make further gains in the short term. However, if a decisive breakout occurs above this range, bulls can anticipate a retest of $3,500.
Disclaimer: The information provided in this article is for informational purposes only and should not be considered financial advice. The views expressed are solely those of the author and do not represent the opinion of The Crypto Basic. Readers are advised to conduct their own research before making any investment decisions, and The Crypto Basic is not responsible for any financial losses incurred.
