Ethereum is currently presenting a mixed picture to the market. On-chain data reveals a compelling trend: significant capital is being strategically reallocated from Bitcoin into the leading smart-contract platform, even as the network grapples with technical issues that have introduced short-term volatility.
Network Latency Sparks Temporary Unease
Recent reports of instability within the Ethereum ecosystem have contributed to a nervous market sentiment. Specific concerns involved delays in transaction finality and block processing. While the network remained fully operational, these latency problems exerted downward pressure on the asset’s price, triggering a phase of selling.
Despite these fundamental challenges and a rejection at the 200-day moving average, Ethereum’s price has demonstrated notable resilience. It is currently holding above crucial support levels, trading at $3,251.20.
Institutional Rotation and Whale Activity
Behind the scenes, deep-pocketed investors appear to be using the uncertainty as a strategic buying opportunity, a move market observers are calling a “great rotation.” A telling example involves a prominent whale wallet, which over a two-week period sold Bitcoin holdings worth over $132 million and concurrently purchased more than $140 million in Ethereum.
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Institutional players are also adjusting their positions. The firm BitMine continued its acquisition strategy, purchasing an additional $112 million in Ethereum holdings on December 10. The company’s total holdings now amount to nearly 3.86 million ETH.
Shrinking Supply Meets Steady ETF Demand
Support is also coming from regulated markets. U.S. spot Ethereum ETFs have recorded three consecutive days of net inflows, with BlackRock’s fund leading the way. This pattern suggests institutional investors view the current price level as an attractive entry point.
Simultaneously, the available supply of Ethereum is tightening. Exchange reserves have plummeted to a multi-year low of just 8.6%. With an increasing amount of Ether locked in staking contracts and BlackRock advancing plans for a staking-enabled ETF, a potential supply shock could catalyze the next upward price movement.
Technical Outlook and Key Levels
The technical situation is reaching a critical juncture. For bullish sentiment to prevail, defenders of the price must maintain the support zone between $3,050 and $3,100 to prevent further technical deterioration. Should the network’s performance concerns be resolved promptly and ETF demand remain stable, analytical models project a potential recovery toward $3,963 before the end of December.
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