Ethereum's 21% Slump Sparks Bullish Rebound Hopes

Ethereum, the second-largest cryptocurrency by market capitalization, has experienced a significant 21% decline over the past month. However, a glimmer of hope has emerged as some level of bullish sentiment began to surface, potentially sparking a rebound.

At the time of writing, Ethereum (ETH) was down by 0.49%. However, buying activity from Korean and U.S. investors, coupled with a surge in trading volume in the derivatives market, could help Ethereum regain strength and rally into the week.

Market sentiment among traditional institutional investors holding Ethereum has been shifting, according to recent insights from Glassnode. From the 10th to the 15th of February, the Ethereum spot ETF turned negative, with approximately 14,000 ETH—worth about $37.7 million at the press-time price of $2,695—being sold. This overall selling activity could be linked to profit-taking by institutional investors, following a predominantly bullish trading week before the 5th of February.

While traditional investors sold Ethereum last week, retail investors in Korea and the U.S. continued buying. The Korea Premium Index, which measures buying and selling activity on Korean exchanges compared to other exchanges, has remained above zero since the 14th of December. At the time of writing, it read 4.7, a significantly high figure. Similarly, U.S. retail investors have continued accumulating Ethereum, as reflected in the Coinbase Premium Index, which stood at 0.02 at press time.

Notably, there has been significant buying activity among derivatives traders. The Taker Buy-Sell Ratio, which compares buy volume to sell volume, read 1.033, indicating more buyers in the market. This sentiment aligns with the Funding Rate, which turned positive and settled into 0.0090 at the time of press. A positive Funding Rate suggests that buyers are dominant and willing to pay a premium to maintain market disparity in perpetual and swap exchanges.

If this trend persists, Ethereum buying activity among traditional investors could resume with the new weekly open. Additionally, continued buying activity among Korean and U.S. retail investors, along with the increased buying pressure from derivatives traders, could further contribute to Ethereum's bullish sentiment, potentially pushing prices higher.