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