Ethereum (ETH) Expected to Rebound on Signal of Strait of Hormuz Reopening...Why?

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Iran's signal that it could reopen the Strait of Hormuz within 48 hours has raised expectations for an Ethereum (Ethereum, ETH) rebound.

According to crypto media outlet Coingape on November 1 (local time), Ethereum rose 1.19% over 24 hours. Iran's proposal to reopen the Strait of Hormuz is a variable that could affect global financial markets. This news comes ahead of the US midterm elections on November 3. Iranian Foreign Minister Abbas Araghchi stated that negotiations are underway with Qatari mediators, and if the US accepts the conditions, the strait could be reopened within 48 hours. Iran laid out its conditions: lifting US sanctions imposed after the collapse of the July Memorandum of Understanding (MoU), reducing the US military presence in the region, restoring oil exemptions allowed in the MoU, returning frozen funds including assets held in Qatar, official recognition of a new Iran-Oman shipping route and closure of other routes, and an end to war on all fronts. This particularly includes a demand to end Israel's attacks on Lebanon.

Coingape pointed out that this announcement could influence oil prices and risk appetite. If an agreement is reached, geopolitical risks would decrease, which could support overall sentiment in financial markets. However, negotiations are still 'conditional,' so traders should not assume that a reopening is imminent.

Ethereum's short-term recovery depends on whether buyers can hold the $2,250 range. This level is crucial as Ethereum recently returned above $2,220. The first resistance is $2,400, the second is $2,450, and if the recovery strengthens, the $2,500 resistance could also be challenged. Conversely, if $2,220 is lost, the recovery attempt would be hampered. The next key support levels are $2,100 and $2,050.

Institutional demand is another variable. On October 30, approximately $155.7 million was net-outflowed from US Ethereum spot ETFs. This marks five consecutive trading days of net outflows, with about $537.6 million withdrawn over seven trading days. Among the top 10 daily outflows, BlackRock's (BlackRock, BLK) ETHA was the largest at approximately $76.6 million, and Grayscale's Ethereum product also saw an outflow of $34.1 million. In the derivatives market, the weighted funding rate turned negative in November. This structure, where short traders pay long traders, can reflect bearish positions and expectations of further decline. However, a negative funding rate does not automatically imply a reversal. If new buying enters Ethereum, liquidation pressure could build on crowded short positions. The US midterm elections on November 3 are also a volatility factor.

[Article Key Summary]

-Iran stated that it could reopen the Strait of Hormuz within 48 hours if the US accepts conditions under Qatari mediation, but negotiations are conditional.

-If Ethereum holds $2,250, it targets $2,400 and $2,450 resistance; if it loses $2,220, the support levels are $2,100 and $2,050.

-US Ethereum spot ETFs have seen net outflows for five consecutive trading days, and the weighted funding rate is negative, raising the possibility of a short squeeze around the November 3 midterm elections.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. This content should be interpreted for informational purposes only.*