Ethereum: Why is $2,200 precarious despite whales accumulating 360,000 ETH?

▲ Ethereum (ETH)/AI Generated Image ©

Despite the positive news of increasing institutional adoption, Ethereum is being tested to defend the $2,200 support level amidst funds shifting towards Bitcoin and macroeconomic pressures.

According to the investment media outlet TradingNews on May 13 (local time), Ethereum (ETH) was trading around $2,253, having fallen approximately 4.47% over the past week. The ETH/BTC ratio dropped to 0.02835, marking a 10-month low, which was interpreted as a sign of market funds aggressively moving towards Bitcoin. The outlet reported that Ethereum was the only cryptocurrency among the top 10 to record a negative return this week.

Technically, a golden cross of moving averages has newly formed, but market sentiment remains mixed. The 20-day simple moving average is at $2,317, and the 50-day simple moving average is at $2,243, creating a short-term bullish signal. However, strong resistance levels are acting around $2,342 and $2,400 based on the Ichimoku Cloud. The Relative Strength Index (RSI) remained below neutral at 47.83, and the Average Directional Index (ADX) also showed uncertainty regarding trend strength. The outlet analyzed that if Ethereum fails to break through the $2,342-$2,400 range, it could face downward pressure towards $2,200, and further down to the psychological support level of $2,000.

On the other hand, on-chain data revealed an accumulation trend by whale investors. Large wallets, excluding exchanges, additionally purchased approximately 360,000 ETH during the recent correction period, which was interpreted as a recognition of the $2,200-$2,400 range as a strategic accumulation zone. Cryptocurrency financial strategy firm BitMine also expanded its holdings to over 5.2 million ETH. Furthermore, Ethereum spot ETF funds recently recorded a net inflow of approximately $70 million, emphasizing that institutional demand has not completely diminished.

In terms of institutional adoption, the actions of JPMorgan, the largest investment bank in the United States, garnered market attention. JPMorgan applied to the U.S. Securities and Exchange Commission (SEC) for an Ethereum-based tokenized Treasury bond fund, ‘JLTXX’. This product is based on short-term U.S. Treasury bonds and repurchase agreements (RPs), utilizing the Ethereum blockchain as a settlement layer. The outlet assessed that this holds significant long-term meaning, given that one of the world's largest financial institutions has chosen Ethereum as a tokenized financial infrastructure.

The macroeconomic environment was still cited as a burden. The U.S. April Consumer Price Index (CPI) rose 3.8% year-over-year, and the Producer Price Index (PPI) surged 1.4% month-over-month, increasing inflation concerns. The U.S. 10-year Treasury yield rose to 4.48%, marking a 10-month high, and the strong Dollar Index (DXY) also pressured the overall risk asset market. Furthermore, the outlet diagnosed that the aftermath of the Iran conflict, with international oil prices remaining above $100 per barrel, is dampening investor sentiment in the cryptocurrency market.

TradingNews evaluated Ethereum's “most likely path” in the short term as sideways or bearish. However, if it breaks through $2,342, there could be room for a rebound to $2,460 and $2,600, with the Fibonacci resistance zone of $2,961-$3,161 also possible thereafter. Conversely, it warned that if $2,200 collapses, the risk of a decline to the $2,120 and $2,000 range could increase.

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