Bitcoin Pullback, Ethereum Longs: Is the Market Betting on ETH to Outperform?

Key Insights

• Ethereum is showing strong bullish momentum, and massive liquidity now sits just above the $2,500 level.
• Spot Ethereum ETF inflows surged by 68% in June, in contrast to Bitcoins declining ETF inflow.
• On-chain data shows massive ETH withdrawals from exchanges, which tends to come before massive upsides.
• Ethereum is entering a "Zone 5" accumulation phase, which is historically marked by underperformance relative to Bitcoin before a strong "catch-up" rally.

Ethereum has been showing strength lately and even has a very important liquidity pocket hovering just above the $2,500 mark according to analysts.

As it stands, institutional interest has been growing lately, and capital is rotating out of Bitcoin.

Amid this trend, Ethereum appears specially poised for a massive price increase, as all indicators now point towards an incoming breakout.

Will the bulls be able to push through resistance and spark a full-fledged rally?

Liquidity Above $2,500 Could Act as a Magnet

Ethereum has been steadily climbing since testing the $2,100–$2,200 support zone earlier this month.

That level held well enough, in a show of strong buyer interest.

On the three-day chart, ETH even recently formed a dragonfly doji candlestick above $2,400. This is a technical pattern that is regarded as a bullish reversal, especially as sellers lose their hold over the market.

More importantly, the Ethereum Liquidation Heatmap shows that there is heavy liquidity just above this mentioned $2,500 price level.

This creates a target zone for market makers, who may attempt to push prices upward to trigger liquidations and capture profit from short positions.

In essence, levels above the $2,500 zone are currently acting as a magnet, and prices could shoot up massively if this zone is broken.

Another interesting aspect of the Ethereum charts to keep in mind is how there are now higher lows forming above the biggest liquidation clusters.

This shows that the path of least resistance is up, and when combined with high trading volume (which is currently the highest since July 2022), ETH is gaining traction both among retail traders and institutional investors.

Strong ETF Inflows Signal Institutional Interest

Another important development is the surge in spot Ethereum ETF inflows. According to data from Soso Value and Farside Investors, inflows rose by 68% in June alone, all the way from $564 million in May to $950 million.

This directly contradicts Bitcoin’s ETF inflows, which dropped by 49.5% in the same period (from $5.23 billion to $2.64 billion).

This 118% swing in favor of Ethereum shows that focus might be shifting towards Ethereum among institutional investors.

These large players tend to make decisions based on liquidity, regulatory clarity and market cycles:

All of which now appear to be aligning in ETH's favor.

Moreover, the demand for Ethereum through regulated investment vehicles strengthens the bullish case, especially as Bitcoin's upside begins to slow.

So far, over 90% of the BTC supply is now in profit, which is the perfect stage for a capital rotation into altcoins.

Is ETH About to Play Catch-Up?

According to Swissblock’s recent analysis, a “Zone 5” accumulation phase is starting to play out for Ethereum.

Historically, this phase tends to be marked by fundamentals like underperformance relative to Bitcoin.

Patterns from 2017 and 2021 show that once BTC supply is heavily in profit, capital tends to rotate into Ethereum and other altcoins.

At the time of writing, Ethereum is still lagging with only around 80% of its supply in profit.

The ETH/BTC ratio is also near multi-year lows, which shows that ETH could be undervalued compared to Bitcoin.

This “catch-up” dynamic has played out in several previous market cycles, where Bitcoin leads the rally before altcoins take over.

If history repeats, Ethereum may be eyeing a strong move towards the upside and could even beat Bitcoin in the short to medium terms.

On-Chain Signals Show Incoming Bullishness

In addition to these bullish predictions, on-chain data shows that over 61,000 ETH was withdrawn from Binance earlier this week.

These inflows tend to indicate that investors are moving their assets into cold storage or long term holding.

This reduces sell pressure on exchanges and leads to upward price momentum from a historical standpoint.

As liquidity is drained from exchanges, the available supply becomes tighter and therefore allows for stronger price moves.

Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.