Recent data suggests that Ethereum could benefit from a decline in interest in Bitcoin (BTC). At press time, ETH has fallen nearly 2%, similar to BTC’s movement.
However, during this period, market interest in ETH has increased, while Bitcoin has seen a decline in trader activity. This raises the question: is capital rotation from BTC to altcoins starting?
Ethereum Gains Momentum Against Number One Coin
On August 26, Bitcoin’s open interest (OI) was over $12 billion. It has now fallen to $11.55 billion, indicating that $500 million worth of positions have been closed in the last 24 hours. In contrast, Ethereum’s OI has risen from $5.25 billion yesterday to $5.38 billion today.
Open interest tracks the flow of money into and out of the cryptocurrency market. An increase in OI means that traders are gaining more exposure to the cryptocurrency, adding liquidity to their contracts, while a decrease signals a decrease in the net position and capital flowing out of the market.
The recent rise in Ethereum’s OI coupled with the fall in Bitcoin suggests that traders are shifting their focus from BTC to ETH in an effort to profit more from Ethereum’s price action.
Read more: The Best Ethereum Wallets to Choose in 2024
Interestingly, this sentiment extends beyond derivatives market activity. According to IntoTheBlock, market participants are more likely to access ETH on the spot market rather than withdraw capital from the altcoin.
This trend is reflected in the buying and selling volumes visible in the order books of the top 20 exchanges. As shown below, participants are bidding (buying) 185,700 ETH, worth about $2,687 each.
These coins, worth about $500 million, slightly exceed the volume of those willing to sell. If demand continues to outpace demand, the price of ETH could be poised for a rebound.
ETH Price Prediction: $2800 Resistance Creates Problems
The Ethereum daily chart shows a sharp downtrend in early August, with the ETH price falling from $3,392 to $2,109. However, in recent weeks, the cryptocurrency has entered a consolidation phase, indicating a difficult scenario where the market is unsure of its next move.
Key support at $2,556 suggests that ETH cannot fall below this level in the short term. Additionally, the Commodity Channel Index (CCI) shows that ETH’s current price of $2,647 is significantly below its fair value.
The CCI measures the price of an asset relative to its average price over a given period. A high CCI value indicates that the asset is overvalued, which is a signal of a potential price drop. Conversely, a low CCI value indicates that the asset is undervalued, which is a potential buying opportunity.
In the case of Ethereum, a decrease in the CCI indicates that the current price is below its historical average, which is a relatively positive sign that could contribute to a more optimistic outlook.
Read More: Ethereum (ETH) Price Prediction 2024/2025/2030
For now, ETH may continue to trade sideways. However, if the altcoin can overcome the current market hesitation to buy large volumes, it could challenge the resistance at $2,810, potentially breaking the $3,000 barrier and targeting $3,360.
On the other hand, failure to break above the overhead resistance could negate the bullish outlook for ETH. In this scenario, ETH price could retest lower support levels around $2,556.
