Ethereum’s price dropped by 2.4% to $1,872 following the release of U.S. Consumer Price Index (CPI) data, after initially peaking at $1,918 on August 13. This downturn came as market participants took profits on gains made prior to the CPI report.
How Did Inflation Impact Crypto?
The latest inflation figures from July revealed a rise in the headline CPI by 0.1% from the previous month and 3.4% compared to the previous year. Core CPI, which does not include food and energy prices, saw a 0.2% monthly increase and 2.5% on an annual basis. These statistics aligned with what economists anticipated, leading to a lack of powerful drivers for digital asset prices to rise further.
Before inflation data roiled the markets, Ethereum was ascending toward $1,918 but faced profit-booking resistance. When the price fell past the $1,887 support level, a thin order book triggered a further slide to $1,872.
Is Ethereum Facing More Selling Pressure?
Yes, according to blockchain metrics that highlight an uptick in distribution activities prior to the decline. The 14-day average for Ethereum exchange net flows turned positive, foreshadowing increased coin movements toward exchanges and suggesting more selling could be on the horizon. Consequently, total exchange holdings ticked up to 15.13 million ETH, a worrying trend during past sell-offs.
Smaller wallets with 100 to 10,000 ETH released 160,000 ETH weekly, while larger entities with 10,000 to 100,000 ETH gained another 100,000 ETH over the same period, pointing to divergent strategies between retail and institutional bodies.
“In the past week, larger Ethereum holders absorbed about 100,000 ETH, while smaller addresses reduced their positions by around 160,000 ETH, indicating a divergence in market sentiment between retail and institutional participants.”
U.S. spot Ethereum exchange-traded funds reported $244.9 million in inflows last week, contrasted by early-week outflows of $8.9 million.
CryptoGoos, a market analyst, highlights that Ethereum maintained a higher low amidst increasing accumulation and reduced selling from long-term holders, which suggests a possible bullish shift.
The technical perspective reveals Ethereum consolidating around $1,875, a crucial support zone. The Chaikin Money Flow indicator registered -0.04, hinting at mild selling pressure, while the 4-hour Relative Strength Index stays low at 45.15, hinting at weak upward momentum.
- The immediate technical hurdle for Ethereum is breaking past $1,920 to test $2,000.
- Netflix inflows and outflows show a mixed investor sentiment, with larger players accumulating and smaller holders selling off.
- Market data suggests potential leverage-based volatility between $1,945-$1,955 and the downside at $1,850-$1,835.
Currently, Ethereum trades near $1,879, balancing above its 20-day Exponential Moving Average (EMA) at $1,884 and its 50-day EMA at $1,865, indicating a fight to maintain upward traction.
