Ethereum (ETH) is currently experiencing a resurgence after months of a downward trend. The demand for this popular altcoin is on the rise once again, with the number of short-term investors crossing the critical threshold of 4 million. This surge in short-term investors is seen as a significant factor in the potential bull run for Ethereum, according to CryptoQuant analyst Burak Kesmeci.
The increase in short-term investors could potentially boost risk appetite for altcoins, especially Ether, which is the only altcoin with a spot ETF. Ethereum’s performance has a significant impact on altcoin and market sentiments, making it a key player in the altcoin bull market.
Historically, periods of significant price increases for Ethereum have coincided with the number of traders surpassing 4 million, indicating that short-term interest plays a crucial role in driving these rallies. High demand from new small traders tends to drive prices up, while a decrease in the number of traders below 4 million often leads to difficulty in sustaining price uptrends and can result in price declines.
However, despite the rise in short-term investors, there is a concern about their retention rate. Ethereum’s Monthly Cohort Retention Rate has been steadily declining, indicating that fewer users are returning month over month after initially joining the market. This lower retention rate leads to decreased user engagement, posing a challenge for Ethereum as new investors enter and exit the market quickly.
Additionally, Exchange Netflow has spiked to its highest level in three weeks, with a surge in ETH deposits onto centralized platforms. This suggests that traders are aggressively exiting the market, with more inflows than outflows.
Currently trading just under $2,700, Ethereum could potentially reclaim $2.8K if short-term demand remains strong and net selling subsides. However, if retention rates continue to drop and exchange inflows persist, ETH may lose momentum and slide back towards $2,448.
In conclusion, while Ethereum is experiencing a resurgence in demand driven by short-term investors, the altcoin faces challenges in retaining these investors and managing exchange inflows. The future price movement of Ethereum will depend on how these factors evolve in the coming days.