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Ethereum: Are institutional investors in the U.S shunning ETH?

Ethereum’s Coinbase Premium Index (CPI) has recently turned negative, implying a reduction in accumulation by institutional investors in the United States on the Coinbase exchange. The analysis, conducted by the pseudonymous analyst ‘Greatest Trader’ from CryptoQuant, reveals a shift in sentiment within the U.S. market towards Ethereum (ETH).

The CPI serves as a gauge by measuring the price difference of an asset on Coinbase against its price on Binance. A positive CPI signifies strong institutional buying pressure on Coinbase, while a negative value suggests reduced accumulation activity on the platform. The analyst examined ETH’s CPI using a 30-day moving average, uncovering a substantial and noticeable decline in the premium index, reflecting a shift in sentiment.

Currently, ETH’s CPI is in negative territory at -0.0027, marking the first instance of negativity over the past month. The analyst emphasizes the significance of this sentiment shift, as many U.S. investors wield considerable influence in the market due to their status as wealthy individuals or institutional entities. This could potentially cast a bearish outlook on ETH’s prospects, indicating reluctance among these investors to accumulate the asset within the current price range.

Notably, the cryptocurrency market has observed significant outflows from ETH investment products this year, despite the altcoin briefly reaching the $2,000 price level in April. Since then, it has trended downwards and remained within a narrow range. This decline has eroded investor confidence and led to a resurgence of negative sentiment in the market. Year-to-date, outflows from ETH have totaled $76 million as of August 4th.

Currently trading at $1,848, ETH encounters strong resistance at the $2,000 mark. The coin’s price has been confined to a tight range since April, a trend mirrored by its statistically positive correlation with Bitcoin (BTC), which has lingered between $29,000 and $30,000 during the same period.

With the decrease in accumulation among daily traders, key momentum indicators remain below their neutral thresholds. The Relative Strength Index (RSI) stands at 47.36, while the Money Flow Index (MFI) approaches the oversold zone at 26.31. Moreover, Ethereum’s Chaikin Money Flow (CMF) indicates an increased liquidity exit from the market, signaling potential challenges ahead for the cryptocurrency.

 

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