After a fairly strong performance in April, Ethereum price has reversed almost all of its recent gains from last month. As it collapsed under the weight of bears heading into the weekend, the altcoin finally found a cushion of support just above $2,000 in the early hours of Saturday. However, the Ethereum token appears to be enjoying the attention of a particular cohort of investors despite its disappointing run over the past few weeks.
ETH Smart Money Buys the Dip
In a recent post on social media platform While headlines have focused on major Ethereum ETF outflows and ETH’s loss of $2,200 of support, smart money investors have remained active in the market.
According to Alphractal, smart money refers to the cohort of investors who own the largest off-exchange positions in a particular cryptocurrency (ETH, in this case). Using the Smart Money Flow Index, the analytics firm found that this specific set of investors had accumulated more Ethereum tokens over the past few days.
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Going further, Alphractal also shared that smart money started linking ETH to hyperliquid and base during the May 14 price drop. The market information platform clarified that the cohort of investors were repositioning themselves in the ETH market rather than selling their assets.
Source: @Alphractal on X
Alphractal noted that this behavior was last seen in October 2023, before the Ethereum price spiked from $1,500 to $4,100, an increase of 173%. According to recent on-chain data, these smart money investors have been “net buyers” 9 over the past 12 days.
The analytics company resolved the following:
This is why monometric theses fail on ETH. ETF outflows alone look bearish. Smart Money Flow looks optimistic on its own. Stack them up and the picture is obvious: Retail and ETF allocators are selling for less than $2,200. The cohort that REALLY moved ETH over the last two cycles is buying them from them.
Ultimately, Alphractal concluded that Ethereum smart money is buying the dip while ETFs and retail investors raze their holdings and, if history is to be believed, this is a divergence that could generate a return in excess of 100%.
Ethereum price at a glance
At the time of writing, the ETH price stands at around $2,113, reflecting a rise of over 2% in the last 24 hours. According to CoinGecko data, the second-largest cryptocurrency is still down around 3% in the weekly time frame.
The price of ETH on the daily timeframe | Source: ETHUSDT chart on TradingView
Featured image from iStock, chart from TradingView
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