Ethereum (ETH) has experienced a remarkable ETH price rally, surging over 40% in the past week and pushing its value above $2,500. However, analysts warn that this upward momentum may be at risk as key indicators point to profit-taking by US investors and a lack of strong on-chain support.
US investors cash out, ETH price rally under threat
Data from CryptoQuant reveals that Ethereum’s Coinbase Premium Index (CPI), which measures the price difference between Coinbase (a US-dominated exchange) and Binance (a global exchange), has been declining, despite the recent Pectra upgrade. The CPI peaked at 0.022 on May 10 but has since dropped to 0.0063, signaling reduced buying interest from US-based traders.
“When the CPI falls, it typically means US investors are selling rather than buying,” said CryptoQuant analyst James Check. “This could indicate that the ETH price rally is losing steam as profit-taking kicks in.”
The declining CPI suggests that American traders are cashing out, potentially leading to increased selling pressure. Historically, US institutional investors play a significant role in Ethereum’s price movements, so their exit could trigger a short-term correction.
On-chain metrics show weak support for ETH’s gains
Further compounding concerns, Santiment’s Price-to-Daily Active Addresses (DAA) divergence metric has turned negative, currently sitting at -58.2%. This indicates that while ETH’s price has been climbing, network activity hasn’t kept pace—a bearish signal.
“A negative DAA divergence suggests that the ETH price rally isn’t backed by organic demand,” noted Lucas Outumuro, Head of Research at IntoTheBlock. “Without sustained user growth, the rally could be vulnerable to a pullback.”
Will Ethereum reclaim $2,745 or drop further?
At press time, ETH is trading at 2,598, just below a critical resistance level at 2,725. Analysts are divided on whether the ETH price rally can continue or if a deeper correction is imminent.
Bearish scenario: A drop to $2,243?
If selling pressure intensifies, ETH could retest support at 2,424. A break below this level might see the price slide toward 2,243, erasing a significant portion of its recent gains.
“The lack of strong on-chain activity and the CPI decline suggest downside risk,” warned Michaël van de Poppe, a prominent crypto trader. *”If Bitcoin also faces resistance, Ethereum could follow with a 10-15% drop.”*
Bullish scenario: Another push toward $2,745
However, if bullish sentiment returns, ETH could attempt another breakout above 2,725. A successful retest of this resistance could pave the way for a move toward 3,000, reigniting the ETH price rally.
“Ethereum’s fundamentals remain strong, especially with the upcoming protocol upgrades,” said Vitalik Buterin, Ethereum’s co-founder, in a recent interview. “Long-term holders shouldn’t be swayed by short-term fluctuations.”
Key factors influencing Eth’s next move
Several factors could determine whether the ETH price rally resumes or falters:
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Bitcoin’s performance – If BTC stabilizes or rallies, ETH could follow.
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ETF approval rumors – Renewed speculation around a spot Ethereum ETF could boost demand.
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Macroeconomic conditions – Fed interest rate decisions may impact investor risk appetite.
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Network upgrades – Continued progress on Ethereum’s scalability improvements could attract new buyers.
Is the ETH price rally sustainable?
While Ethereum’s recent surge has been impressive, the declining CPI and negative DAA divergence suggest caution. The ETH price rally may need stronger fundamentals to sustain its upward trajectory. Traders should watch key support and resistance levels closely in the coming days.
“Ethereum’s price action will depend heavily on whether institutional inflows return,” concluded Alex Krüger, a macroeconomic analyst. “For now, the ETH price rally looks overextended, and a consolidation phase seems likely.”
As the market digests these developments, the next few days will be crucial in determining whether Ethereum can hold its gains or if a deeper correction is on the horizon. The Bit Gazette will report developments as they happen.
