Ethereum Surges 40% But Faces US Selling Pressure

Ethereum (ETH) has experienced a significant surge, with its value increasing by over 40% in the past week. This rally has been fueled by renewed optimism across the cryptocurrency market, with the coin currently trading above the $2,500 mark. However, this upward momentum may be at risk as US-based investors appear to be cashing out, which could impact ETH’s price performance in the near term.

According to CryptoQuant, Ethereum’s Coinbase Premium Index (CPI) reached a weekly peak of 0.022 on May 10 and has since trended downward, currently sitting at 0.0063. This decline in the CPI suggests increased selling pressure from US investors, despite ETH’s 5% price rally during the same period. The CPI measures the difference between ETH’s prices on Coinbase and Binance, serving as a good indicator for tracking US investor sentiment. A rising CPI indicates stronger buying pressure from US-based institutional and retail investors, while a falling or negative CPI signals lagging demand on Coinbase due to profit-taking or waning interest among US buyers. The current downward trend in the CPI indicates that American investors are exiting their positions and realizing gains, rather than buying into the rally.

Furthermore, 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. According to Santiment, the metric has been negative over the past few days, even as ETH’s price climbs. The negative value indicates that a corresponding rise in user engagement does not support ETH’s recent price gains, suggesting that not enough demand is driving the rally. This lack of demand increases the risk of a pullback in the near term.

At the time of writing, ETH is trading at $2,598, 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. However, if bullish pressure strengthens, ETH could make another attempt to climb back to $2,745.