Crypto news

Ethereum (ETH) quotes are showing a confident recovery, bouncing 22% from the June low. The market has settled above a key trend line closely watched by institutional players. This rise coincided with renewed capital inflows into spot ETH ETFs, which had previously recorded steady outflows for several weeks.

Large holders continued to actively accumulate the cryptocurrency even during the decline phase, as confirmed by recent on-chain data. However, the rapid growth in borrowed funds raises doubts about the stability of this success. Experts debate whether the market has formed a real bottom or if this is another false bounce within a global downtrend.

Ethereum holds the monthly VWAP line

On June 14, the Ethereum price 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 rose by 19%, while the May breakout brought a more modest 7% gain.

Notably, in both cases, a few days after the breakout, capital inflows into spot ETFs resumed. This dynamic indicates that institutions start actively buying at the first signs of an upward trend. Of course, it is difficult to establish a direct causal link here, as events may simply reflect overall market optimism. Nevertheless, the correlation repeats regularly, so investors should closely monitor fund statistics.

Inflows into spot ETFs break the prolonged outflow streak

The sentiment reversal came at a very timely moment. Literally the day after the price 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. Between May 11 and 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 net assets under management are approaching the $10.04 billion mark. The recovery in May also started with small amounts, which then grew into a series of successful days. Therefore, if a 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 Santiment analysts, 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 purchased 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 low. It was then that the net position change indicator 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 quickly buy up any available volumes. As a result, a seller deficit has formed in the market, which usually heralds an imminent trend change.

Analysts from Swissblock noted in their recent Altcoin Vector report that Ethereum has been in a capitulation phase for a long time. This state of strong market pressure often precedes a powerful price reversal. The current reduction in exchange balances confirms that the acute selling phase appears to be truly behind us. Nevertheless, the overall picture is significantly marred by the situation in the derivatives market.

Key levels for Ethereum

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 insufficient for a definitive reversal.

To confirm an upward trend, 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 is formed only after the complete liquidation of excessive leveraged positions. Currently, we are seeing 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 longs 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 will 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.

Analyst's opinion: The accumulation of $950 million by whales and the resumption of ETF inflows are undoubtedly bullish signals. However, the explosive growth in futures open interest creates an extremely fragile structure. Until the market digests the excess margin positions, any pullback could result in a cascade of liquidations. A true bottom will only be confirmed after the price settles above $1,851 amid a reduction in market leverage.