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▲ Ethereum (ETH), Dollar (USD)/ChatGPT Generated Image
An analysis shows that Ethereum (ETH) is exhibiting signs of accumulation by large investors despite recent bearish trends. While ETF outflows and a break below the $2,200 support level fueled market instability, on-chain data indicates that so-called smart money increased its Ethereum holdings during the downturn.
Bitcoinist reported on May 24 (local time) that Ethereum gave back most of its gains over the past month after showing a favorable trend in April. With increasing bearish pressure ahead of the weekend, Ethereum found support slightly above $2,000 in the early hours of Saturday.
Market intelligence platform Alphractal recently analyzed in an X (formerly Twitter) post that smart money is creating a trend that the market is missing. Alphractal defines smart money as a group of investors holding the largest positions in a specific cryptocurrency, excluding exchanges. Based on the smart money flow index, this group of investors has accumulated additional Ethereum over the past few days.
Alphractal stated that on May 14, during a price decline, smart money began bridging large amounts of Ethereum to Hyperliquid and Base. Alphractal explained that this movement is not a sale of holdings but rather a repositioning of positions within the Ethereum market.
This trend also appeared in October 2023. At that time, Ethereum surged 173%, jumping from $1,500 to $4,100. Recent on-chain data shows that smart money investors have been net buyers for 9 out of the last 12 days.
Alphractal stated, “This is why analyzing Ethereum by looking at only a single indicator fails. If you only look at ETF outflows, it appears bearish, but if you only look at smart money flow, it appears bullish. When you overlay the two indicators, the picture is clear. Retail investors and ETF allocators are selling below $2,200, and the group that actually moved Ethereum in the last two cycles is absorbing that volume.”
Alphractal concluded that Ethereum smart money is buying the dip while ETFs and retail investors are reducing their holdings. The analysis also suggested that if past trends repeat, this divergence could lead to returns exceeding 100%.
*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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