Why Did the Rise of Ethereum Stop?

David Duong, the research director of Coinbase Institutional, notes that the recent bullish trend of Ethereum (ETH) is based on technical factors, but the capital allocation demand from investors remains limited. “The increase of ETH last week was largely due to technical reasons. This is related to the surplus of unmatched positions, closing short positions, and then reopening positions. This bullish wave is essentially ETH catching up with competitors like BTC and SOL,” Duong said on social media. Duong stated that the recovery of ETH prices does not imply a general capital allocation demand in the market: “Price fluctuations like this do not mean that the market is ready to allocate ETH on a large scale; demand remains limited.” On the other hand, Duong also painted a positive picture in his comments about Bitcoin (BTC): “BTC is on a bullish trend and its dominance could still increase.” Regarding the macroeconomic outlook, Duong stated that the easing in trade relations between the United States and China has boosted investor sentiment over the past week. In particular, Duong noted that the United States’ 600 billion dollar trade deal with Saudi Arabia has reinforced this optimism and this has pushed back expectations of a recession in the United States this year. However, Mr. Duong stated that things are more complicated on the Japanese side as the country’s Senate elections in July are likely to make Tokyo’s stance tougher, despite previous statements calling for a trade agreement to be reached in June.