Crypto news

The price of Ethereum (ETH) has rebounded 22% from its June low, holding above a key trendline for institutional investors. This rise coincided with renewed inflows into spot ETH ETFs, which had been recording capital outflows for weeks.

Large holders continued to actively accumulate the cryptocurrency even during the decline, as confirmed by fresh on-chain data. On the other hand, the rapid growth in the volume of borrowed funds casts doubt on the stability of this success. Therefore, experts debate whether the market has formed a real bottom or if this is another false bounce within a global downtrend.

The observed picture indicates that whales are acting with a clear long-term perspective. Ignoring local drawdowns, they are systematically increasing their positions, which is a strong bullish signal. However, as practice shows, whale accumulation alone is not enough for sustainable growth.

Ethereum Holds the Monthly VWAP Line Again

In mid-June, specifically on the 14th, the Ethereum exchange rate rose above the monthly VWAP line. This volume-weighted average price serves as a dividing line for large players between the accumulation and distribution phases of assets.

Previous breakouts of this indicator led to similar results. For example, after the April breakout above VWAP, the coin appreciated by 19%, while the May breakout brought a more modest 7% gain.

Notably, in both cases, capital inflows into spot ETFs resumed a few days after the breakout. This dynamic suggests that institutions begin actively buying at the first signs of an uptrend. Of course, it is difficult to establish a direct cause-and-effect relationship here, as events may simply reflect general market optimism. Nevertheless, the correlation repeats regularly, so investors should closely monitor fund statistics.

Spot ETF Flows Turn Positive Again After a Tough Streak

The sentiment reversal came just in time. Literally the day after the rate settled above the VWAP line, on June 15, net inflows into spot ETH ETFs amounted to $22.5 million.

This positive result broke an extremely painful series of declines. The fact is that from May 11 to June 12, capital outflows were recorded almost daily, with only two trading sessions as exceptions. For comparison, the situation looked much better in early May: on May 1, funds attracted $101 million, and on May 5, another $98 million.

Currently, the total volume of net assets under management is approaching the $10.04 billion mark. The recovery in May also began with small amounts, which then grew into a streak of successful days. Consequently, if the market bottom is confirmed, we may see a repeat of this positive scenario. However, relying solely on ETFs would be a mistake, as key processes are now occurring directly within the network.

Whales Continue Buying, Signs of Capitulation Fade

Large investors began accumulating coins even before the chart crossed the VWAP line. Whales systematically increased their positions, completely ignoring the local price decline. According to analysts at Santiment, since June 10, the balances of millionaire wallets have grown from 124.85 million ETH to 125.4 million ETH. Thus, in just one week, they bought coins worth a total of approximately $950 million.

In parallel, on-chain metrics recorded a decline in seller activity. Mass market panic subsided around June 7, when the coin found a local bottom. It was then that the net change in positions on exchanges turned negative, signaling an outflow of coins from trading platforms.

This investor behavior indicates a transfer of cryptocurrency to cold wallets for long-term storage. This trend is supported by large whales, who promptly buy up any available volumes. As a result, a seller deficit has formed in the market, which usually heralds an imminent trend change.

Analysts at Swissblock noted that Ethereum had been in a capitulation phase for a long time. This state of strong market pressure often precedes a powerful reversal in quotes.

The current reduction in exchange balances confirms that the acute phase of selling appears to be truly behind us. Nevertheless, the overall picture is significantly marred by the situation in the derivatives market.

Key Levels for Ethereum Emerge

Currently, Ethereum is trading around $1,771, holding above the monthly VWAP, which is at the $1,705 level. Since the beginning of June, the coin has gained about 22% from its low of $1,507, but this is still not enough for a definitive reversal.

To confirm an uptrend, buyers need to close a daily candle above the resistance at $1,851. This would allow the asset to return to its previous trading range.

The main danger now lies in excessively high leverage. The total open interest in ETH futures has jumped from $8.86 billion to $9.96 billion, and at its peak exceeded $10.27 billion.

Typically, a reliable foundation for growth forms only after the complete liquidation of excess leveraged positions. Currently, we are observing the opposite process—open interest is rising along with the price. This state of affairs indicates the dominance of margin traders rather than real demand in the spot market. Overloaded long positions could trigger a wave of forced liquidations at the slightest downward movement, so it is too early to talk about the end of capitulation.

If a decline begins, the first support will be the $1,624 level, and the critical point will be the low of $1,507. A daily close below this mark would force the market to seek new lows. Only a confident breakout of the $1,851 barrier will help distinguish a true bottom from a temporary bounce.

My analysis: The accumulation of $950 million by whales is a powerful fundamental signal, indicating the belief of "smart money" in Ethereum's long-term value. However, the current growth on leverage creates an extremely vulnerable structure. Until we see a decline in open interest and a sustained breakout above $1,851, any bounce should be viewed as a potential bull trap. A true bottom will only be confirmed after a complete "cleansing" of the market from excess leverage.