Key takeaways:

• If Ether price hits $4,350, over $1 billion in short (bearish) positions face liquidation risk.

• BitMine Immersion expanded holdings to $10.6 billion, targeting 5% of the total Ether supply.

• Ether ETFs saw $547 million in inflows, reinforcing institutional demand amid declining onchain activity.

Ether (ETH) struggled to hold above $4,200 on Tuesday despite strong demand for spot Ethereum exchange-traded funds (ETFs) the day before. Weaker onchain activity likely weighed on investor sentiment, yet companies continue to add ETH to their reserves as part of longer-term strategies.

Traders now question if ETH can reclaim the $4,800 level last seen on Sept. 13.

On Monday, spot Ethereum products recorded $547 million in net inflows, reversing the previous week’s trend and signaling a potential shift in investor confidence. Traders had been worried that demand for digital assets could falter if the United States faced a government shutdown or if expectations for the artificial intelligence sector dimmed.

Those concerns eased as it became clear that a partial closure of federal agencies would have limited lasting effects, since spending typically resumes once operations normalize, according to Yahoo Finance. At the same time, interest in technology stocks improved after OpenAI announced fresh partnerships with Nvidia (NVDA) and Oracle (ORCL), further supporting broader risk appetite.

As investors grew less risk-averse, demand for cryptocurrencies resurfaced on Monday, boosted by BitMine Immersion’s (BMNR) purchase of 234,800 ETH as part of its treasury strategy. The firm now holds more than $10.6 billion in Ether, with Chairman Tom Lee reaffirming a long-term goal of securing 5% of the total ETH supply.

Ether also found support from a new partnership between Consensys, the Ethereum ecosystem developer, and SWIFT, the interbank messaging network. More than 30 financial institutions will collaborate on a prototype for cross-border payments aimed at improving interoperability for tokenized assets.

While ETH itself is unlikely to see direct benefits from the project, since SWIFT does not move money but instead provides the infrastructure for institutions to coordinate settlements, the involvement of Consensys likely added credibility and helped keep ETH above $4,100.

ETH negatively pressured as Ethereum network activity declines

Despite continued accumulation by institutional players, Ether traders remain cautious. Ethereum’s onchain activity has been trending lower, even as some competing networks show the opposite pattern.

Fees on Ethereum dropped 12% over the past 30 days, according to Nansen data, while transaction count fell 16%. In contrast, fees on BNB Chain climbed 95%, and HyperEVM, the network behind the Hyperliquid perpetual trading platform, rose 70% during the same period.

Ether bulls are also looking ahead to the upcoming $1.6 billion distribution from the FTX Recovery Trust. The third tranche of creditor payments is scheduled for Tuesday, although funds may take up to three business days to reach bank accounts. Analysts expect at least some of those recipients to reinvest in cryptocurrencies.

Related: Hong Kong’s $500M HashKey Fund–How DATs could redefine BTC and ETH treasuries

CoinGlass data shows that if Ether rises to $4,350, nearly $1 billion in short positions could face liquidation. Ether’s status as the second-most preferred institutional asset is clear, with $22.8 billion in spot ETF holdings and $55.6 billion in futures open interest, keeping it well ahead of competitors.

From a fundamental standpoint, Ether appears well-positioned to reclaim $4,800 as strategic reserve companies continue accumulating ETH and spot ETF demand grows. In the near term, however, sentiment remains heavily influenced by external factors such as the outlook for US economic growth, leaving the sustainability of Ether’s momentum uncertain.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.