Ethereum (ETH), the world’s second-largest cryptocurrency by market capitalization, has witnessed a significant boost in investor sentiment following the re-election of Donald Trump as U.S. president. Analysts suggest that Trump’s victory has revived the appetite for risk assets, contributing to increased inflows into Ethereum ETFs and strengthening predictions for a potential ETH price surge in the coming months.
Ethereum ETF Inflows Surge Post-Election
As per data from Farside, Ethereum ETFs experienced notable shifts in inflows around the U.S. election. Before election day, the nine Ethereum-based ETF products recorded an outflow of $63.2 million, with no flow seen on the election day itself. However, the tide turned dramatically after Trump’s re-election on November 6, with Ethereum ETF net inflows soaring to $52.3 million on that day. The momentum continued, with a further surge to $72.9 million the next day. This surge highlights the growing confidence in Ethereum’s potential as a favored investment in a post-election market environment.
Ethereum’s Short-Term Target: $3,200
Following these inflows, Bitfinex analysts have set a short-term price target of $3,200 for Ethereum, suggesting that the cryptocurrency could rally by 8.95% from its current price of $2,937. They anticipate that this surge will materialize in the next few months, especially if Bitcoin’s market dominance exceeds the crucial 60% mark. As of the latest data, Bitcoin’s dominance stood at 59.7%, with fluctuations occurring around the 60% level. If Bitcoin continues to solidify its dominance, Ethereum is expected to follow suit, reaching its short-term target of $3,200.
While this represents a potential upside, Ethereum remains 34.57% below its all-time high of $4,891, which was recorded on November 16, 2021. Despite this, the short-term forecast of $3,200 offers a glimmer of optimism for investors who have been weathering the prolonged bear market.
Concerns of Price Correction Amid Increased Volatility
While the outlook remains bullish for Ethereum, there are underlying concerns that could dampen its price trajectory. The surge in net inflows into derivative exchanges, highlighted by CryptoQuant’s report of 82,000 ETH moving into derivatives on November 5, has raised red flags. Historically, such movements have been linked to heightened market volatility or price corrections. Additionally, several Ethereum whales have recently exited multi-year dormancy, selling off significant amounts of ETH, adding further pressure to the asset’s price.
For instance, three dormant Ethereum addresses, untouched for over eight years, sold over 44,700 ETH after the price rose to $2,700. With Ethereum potentially reaching the $3,200 mark, more dormant addresses may be tempted to sell, potentially triggering a price dip.
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Despite the looming correction risks, Bitfinex analysts remain confident about Ethereum’s upward momentum. They point to Ethereum’s rising open interest as a strong indicator of bullish sentiment. Recent data shows Ethereum’s open interest has surged to $1.3 million, a significant jump from the $800,000 recorded in August. This increase suggests a growing interest in Ethereum’s future price action and could serve as a catalyst for the anticipated price surge in the coming month.
In conclusion, while Ethereum faces potential challenges from increased market volatility and whale sell-offs, the surge in ETF inflows and rising open interest continue to point toward a promising short-term outlook. Analysts remain optimistic about Ethereum’s potential to reach $3,200, with a growing sense of confidence bolstered by the broader market’s enthusiasm following Trump’s re-election.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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