Ethereum Faces $2600 Test Amid Pectra's Decline, Institutional Interest On Rise

Ethereum (CRYPTO: ETH) is currently trading at $2587, marking a minor 0.82% increase over the past 24 hours. The day's range saw lows of $2446.5 and highs near $2593.17. The fading momentum comes in spite of bullish fundamentals such as nearing the midline of the Gaussian Channel, and $115 million in fresh institutional inflow. 

Ethereum's price is stalling, signaling a critical juncture for traders. According to a post on X, formerly Twitter, crypto analyst, Michael Van De Poppe, pointed out that Ethereum is approaching a crucial support zone. If Ethereum holds this level, a rally toward the $3000 mark may be on the horizon.

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Michael's analysis finds support in on-chain metrics shared by Glassnode, which indicate heavy trading activity and resistance between the $2400 and $2900 zone. ETH's ability to stay above this range can confirm a bullish momentum.

According to NewsBTC, with ETH hovering around the $2500 mark, the market may be overheating. RSI levels are creeping into the overbought territory, and funding rates are rising, both signaling that a correction may be around the corner. With momentum slowing down, a short term price correction may follow as investors move to the accumulation phase.

Institutional interest in Ethereum remains robust. Abraxas Capital Management, a London-based investment firm, is ramping up ETH holdings. Per LookOnChain, the company purchased 46,295 ETH worth $115.3 million. Beginning earlier this month, the firm has accumulated 350,703 ETH, totaling around $830 million in value. 

According to BeInCrypto, the firm has been channeling its funds to Ethereum by reducing its holdings in Bitcoin (CRYPTO: BTC), marking a shift in institutional interest. The move comes as a part of the firm's objectives with its Alpha Ethereum fund, targeted at outperforming ETH's native price through conditional leverage.

Per GlassNode, Ethereum's on-chain data is not mirroring the optimistic sentiment. Ethereum's latest Pectra upgrade, aimed at improving scalability and security, hasn't delivered the user engagement as expected. User activity has fallen, with a 1.8% drop in users making their first transaction on Ethereum as compared to the monthly average. User churn has gone down by 8%, indicating higher retention despite no new users.

A transfer worth $262 million in ETH was made by an Ethereum co-founder, Jeffrey Wilcke, to the Kraken cryptocurrency ecosystem, sparking potential sell-off concerns and implications on the ETH price with increased whale liquidation.

According to CoinTelegraph, a bullish pattern has reemerged on Ethereum's price chart, with ETH moving near the midline of the two-week Gaussian channel flip. Crossovers precede strong rallies, with ETH rising over 93% in 2023 and 1820% in 2020 after similar moves.

ETH's struggle below the 0.5 to 0.618 Fibonacci levels indicates a potential short-term pullback, with support around $2150 and $1900 slowing any sustained bullish momentum.

Ethereum's price action in the short term remains uncertain amid conflicting indicators, while market watchers await clarity.

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