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Ethereum’s (ETH) 40% Rally at Risk as US Investors Cash Out

2 mins
Updated by Ann Maria Shibu
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In Brief

  • Ethereum's recent 40% rally faces pressure as US investors cash out, signaling a potential price pullback.
  • The Coinbase Premium Index shows declining demand from US buyers, indicating reduced market interest.
  • A negative Price-to-Daily Active Addresses divergence suggests ETH's price gains lack strong on-chain support.
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Leading altcoin Ethereum has surged by over 40% in the past week, fueled by renewed optimism across the cryptocurrency market. At press time, the coin rests solidly above the psychological $2,500 price mark.

However, this rally may be losing steam, especially as US-based investors appear to be cashing out. How will this impact ETH’s price performance in the near term?

ETH’s Price Rally Faces Risk as US Investors Exit

According to CryptoQuant, ETH’s Coinbase Premium Index (CPI) reached a weekly peak of 0.022 on May 10 and has since trended downward. As of this writing, the metric sits at 0.0063.

Ethereum Coinbase Premium Index.
Ethereum Coinbase Premium Index. Source: CryptoQuant

This metric has noted a decline despite ETH’s 5% price rally during the same period. This suggests increased selling pressure from US investors, a trend that can weigh heavily on the altcoin’s price.

ETH’s CPI measures the difference between the coin’s prices on Coinbase and Binance. It is a good indicator for tracking US investor sentiment.

When the CPI rises, it means ETH is trading at a premium on Coinbase compared to international exchanges, reflecting stronger buying pressure from US-based institutional and retail investors.

Conversely, when the CPI falls—or worse, turns negative—it signals that demand on Coinbase is lagging behind global markets, due to profit-taking or waning interest among US buyers. ETH’s falling CPI amid its price rally indicates that American investors are exiting their positions and realizing gains, rather than buying into the rally.

Moreover, readings from ETH’s Price-to-Daily Active Addresses (DAA) divergence, an on-chain metric that compares price movement with network activity, confirm this bearish outlook. Per Santiment, the metric has been negative over the past few days even as ETH’s price climbs. As of this writing, it is at -58.2%.

Ethereum Price DAA Divergence.
Ethereum Price DAA Divergence. Source: Santiment

This negative value indicates that a corresponding rise in user engagement does not support ETH’s recent price gains. In essence, not enough demand is driving ETH’s rally, hence it risks a pullback in the near term.

Will Bulls Reclaim $2,745 or Is a Deeper Drop Ahead?

ETH trades at $2,598 at press time, resting just below the multi-month resistance formed at $2,725. As US-based investors lock in profits, downward pressure on ETH is intensifying and could push its price toward $2,424.

If the bulls fail to defend this level, the coin’s price could plummet further to $2,243.

ETH Price Analysis
ETH Price Analysis. Source: TradingView

However, if bullish pressure strengthens, ETH could make another attempt to climb back to $2,745. 

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Disclaimer

In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

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Abiodun Oladokun
Abiodun Oladokun is a Technical and On-Chain Analyst at BeInCrypto, where he specializes in market reports on cryptocurrencies from diverse sectors, including decentralized finance (DeFi), real-world assets (RWA), artificial intelligence (AI), decentralized physical infrastructure networks (DePIN), Layer 2s, and meme coins. Previously, he conducted market analysis and technical assessments of various altcoins at AMBCrypto, utilizing on-chain analytics platforms like Messari, Santiment...
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