Ethereum Whales Bought the Dip, But the Recovery Faces Additional Risks

Ether (ETH) was trading at $2,445, up by over 15% from its lowest point this week. This price action was in sync with that of Bitcoin (BTC)

After a massive sell-off on Monday, Aug. 5, which saw Bitcoin (BTC) drop to a low of $24,200, Ether (ETH) also fell sharply, hitting a low of $2,191. However, both tokens bounced back on Tuesday, Aug. 6, with ETH rising by over 15% from its lowest point this week.

This price action was in sync with that of other major cryptocurrencies, with BTC rising by over 10%, Cardano (ADA) increasing by over 20%, and Bittensor (TAO) gaining over 30%.

Some big investors appear to have used the opportunity to buy the dip, with one entity, known as ‘7 Siblings,’ buying 56,093 ETH tokens, valued at over $129 million, at an average price of $2,318. 7 Siblings began buying when the price dropped to $2,600 and continued until the price dropped to $2,191, over a period of 12 hours.

Meanwhile, Exchange Traded Funds investors also appeared to buy the dip, with Bloomberg reporting that these investors bought assets worth $49 million, in a sign of increased investor optimism.

However, the crypto industry is still being cautious, with some big holders selling their tokens. Jump Trading, a prominent player in the crypto industry, sold Ether tokens worth over $609 million in the past few weeks. Another big holder, known as Longling Capital, sold 20,000 coins after being largely dormant for almost two years.

There are also some additional risks to Ethereum’s recovery. For one, not every analyst believes that the Federal Reserve should cut interest rates in September. In an interview with CNBC, Komal Sri-Kumar, founder of Sri Kumar Global Strategies, said that the Fed should wait for inflation to fall before cutting interest rates.

While Sri-Kumar seems to be in the minority, with the CME Fedwatch tool giving a 76.5% probability of a 50bps rate cut in September (followed by another one in November and December), this could still pose a problem for crypto.

On the other hand, another positive for Ethereum is that its staking yield rose by 6.3% in the past 24 hours to 9.46%. This rebound occurred as the staking market cap fell by 26% to $81.95 billion.

Finally, there are some technical risks to Ethereum’s price. On the daily chart, the coin formed a triple-top pattern whose neckline was at $2,810. The coin has now dropped below this neckline, indicating that bears have taken over.

Another technical indicator is that Ether is about to form a death cross as the 50-day and 200-day Simple Moving Average are about to make a bearish crossover. Also, as was previously noted about Bitcoin, any rebound after a sell-off could turn out to be a dead cat bounce.