Ethereum
Ethereum Seeing High Exchange Outflows, But Watch Out For This Bearish Signal
On-chain data shows Ethereum has been observing high exchange outflows recently, but a development related to Tether (USDT) may be a bearish obstacle for the market.
Ethereum And Tether Both Have Seen Withdrawals From Exchanges Recently
As explained by the on-chain analytics firm Santiment in a new post on X, the market is ending July on a mixed note in terms of the exchange flows. The metric of interest here is the “Exchange Flow Balance,” which measures the net amount of a given asset that’s entering into or exiting the wallets associated with centralized exchanges.
When the value of this metric is positive, it means the inflows to these platforms are outweighing the outflows right now. Such a trend implies there is currently demand for trading away the asset among the investors.
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On the other hand, the indicator being negative implies the holders are making net withdrawals from the exchanges, potentially holding onto their coins in the long term.
What implications either of these trends would have on the wider market depends on the exact type of cryptocurrency the one in question is: stablecoin or volatile asset. In the context of the current topic, Santiment has cited the data for Ethereum and Tether, which means both types of coins are relevant here.
Below is the chart shared by the analytics firm that shows the trend in the Exchange Flow Balance for the two assets over the past few months:
As displayed in the above graph, the Exchange Flow Balance has recently observed a sharp negative spike for both Ethereum and Tether recently, implying that investors have been taking large amounts of these coins off into self-custody.
For volatile assets, trading the asset away can have a negative effect on its price, so the exchange reserve going up can be a bearish sign. The Exchange Flow Balance being negative, on the contrary, can be bullish, as it implies the potential “sell supply” of the coin is decreasing.
During the latest outflow spree, investors have withdrawn 80,763 ETH (almost $268 million) from these platforms, which is the largest outflow spike in five months. Thus, Ethereum has seen its sell supply go through a significant decline.
In the case of stablecoins, exchange inflows also mean the investors want to swap the asset, but as these tokens have their value “stable” around the $1 mark by definition, such trades have no effect on their price.
This doesn’t mean that they aren’t of any consequence to the market, however, as investors usually use stables to buy a volatile asset like Ethereum, so large exchange inflows of a stablecoin like Tether can be bullish for these other coins.
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In this view, the exchange reserve of USDT and other stables can be considered as a potential “buy supply” for the volatile cryptocurrencies. Recently, USDT has seen net withdrawals of $346 million, meaning that this buy supply has gone down.
“This reflects less buying power for future purchases from traders, which is generally a necessary ingredient needed to boost prices in the long run,” notes Santiment. It now remains to be seen how the Ethereum price will develop in the near future, given that both bullish and bearish developments have simultaneously occurred in the market.
ETH Price
At the time of writing, Ethereum is trading at around $3,300, down more than 3% over the past week.
Featured image from Dall-E, Santiment.net, chart from TradingView.com
Negative sentiment is gradually growing in the general crypto market once again, with major digital assets like Ethereum, the second-largest cryptocurrency, witnessing a notable setback that led to a slowdown of its renewed upside price momentum. Due to the sudden drop, several crypto analysts believe that the altcoin could face an extended bearish movement shortly.
Ethereum Set To Enter A Correction Phase
IC News, an informative platform has delved into Ethereum’s current price action, offering an insightful perspective about its performance in the near term. After a thorough examination, the platform highlighted that ETH might be on the brink of a temporary corrective phase as market momentum cools off following recent gains. The platform’s prediction is due to signs of overbought conditions and profit-taking by retail and institutional investors, which could affect the stability of the crypto asset’s value.
According to IC News, Ethereum is currently getting close to a critical resistance area at the $3,600 price level, where there is a lot of supply and room for profit-taking. Given how robust this resistance level is, the platform claims there is a good chance that a brief period of correction could occur soon to limit buying pressure.
Furthermore, IC News points out that in order to create a more stable uptrend for Ethereum, the market will have to fall back toward the 200-day Moving Average (MA).
While the analysis might spark worries about the altcoin‘s short-term trajectory, the pullback may turn out to be healthy for the asset. This is because the altcoin may create new strong support levels during the correction phase and fortify its base for future price expansion. It could also present several buy signals and opportunities for new and seasoned investors, allowing them to reassess their positions in light of waning market sentiment.
Despite the sudden price decline, the digital asset persistently demonstrates bullish potential in the broader outlook, with market expert and trader, Captain Faibik predicting a mid-term price target for Ethereum at the $5,450 level.
Thus far, Ethereum continues to move within the Broadening Wedge pattern, a key indication of rising momentum. Meanwhile, Captain Faibik anticipates a breakout from the bullish formation in the coming days, which will trigger another huge rally for ETH, potentially to $5,450 in the mid-term.
ETH Now Ahead Of America’s Banking Giant
Ethereum’s recent upswing has led the altcoin to crucial milestones in the last few days, such as surpassing financial behemoth Bank of America by market capitalization. On Sunday, ETH saw a surge in its overall market cap by over 5%, bringing it to a total of $383 billion and breaking past the market cap of Bank of America by a whopping $40 billion.
IC News stated that the crypto asset’s high valuation in comparison to Bank of America reflects a change in the dynamics of the traditional sector as blockchain technology adoption and growth start to outpace traditional banking systems.
Featured image from Unsplash, chart from Tradingview.com
Ethereum has recently climbed to a major high above $3,400, reigniting enthusiasm among market participants and signaling a potential upward trend that may lead to a push above $4,000 toward a new all-time high.
This optimism has been met with major speculation of ETH’s price from the crypto community and analysts, who are observing key indicators within the market to assess the asset’s trajectory.
Ethereum Rise and Market Sentiment
According to a report shared by a CryptoQuant analyst known as ‘ShayanBTC,’ Ethereum’s recent price performance, up by 35% in the past week, has been accompanied by positive sentiment in the futures market, providing a detailed look into potential short-term fluctuations.
Shayan pointed out that the funding rates for Ethereum futures have remained positive, demonstrating strong demand and bullish sentiment among investors.
Notably, positive funding rates typically indicate buyers are willing to pay a premium to hold long positions, which signifies market confidence.
The analyst highlighted that this surge in positive sentiment was especially evident when Ethereum surpassed the $3,000 mark, reflecting a similar pattern observed during the March 2024 rally that culminated in a yearly peak.
This pattern now raises questions about whether the current momentum can be sustained or if the market is vulnerable to sudden reversals, just as it did following a major rally earlier this year.
What Is Expected
While positive funding rates are a favorable sign of market interest, they can also indicate heightened risk when they become too elevated. Shayan particularly noted:
Although positive funding rates generally signify healthy demand in a bullish market, elevated funding rates can be a red flag.
The analyst cautioned that high funding rates may point to an “overheated” market, which could increase the likelihood of a long liquidation cascade if the price faces significant resistance or experiences even a modest correction.
Elevated rates suggest that traders may be over-leveraged, creating conditions where a sharp pullback could trigger a wave of sell-offs as leveraged positions are liquidated.
The CryptoQuant analyst further revealed that with Ethereum experiencing high funding rates in the current market climate, investors may need to “exercise caution and adopt strategies to mitigate potential risks.”
The analyst emphasized that with heightened funding rates comes an increased chance of market volatility. Rapid price movements could lead to liquidations, particularly if profit-taking or minor corrections unsettle the market.
Meanwhile, Ethereum has breached the $3,400 price mark to trade as high as $3,424 earlier today. However, at the time of writing, the asset appears to have seen a slight correction with a current trading price of $3,289, albeit still up by 2.2% in the past day.
Featured image created with DALL-E, Chart from TradingView
On-chain data shows metrics related to network activity have spiked for Ethereum recently, something that could pave way for a further rally.
Ethereum Transaction Volume & Whale Transfer Count Have Spiked Recently
According to data from the on-chain analytics firm Santiment, Ethereum has seen an uplift in two activity-related metrics. The indicators in question are the Transaction Volume and the Whale Transaction Count.
The first of these, the “Transaction Volume,” keeps track of the total amount of the cryptocurrency (in USD) that users on the ETH network are shifting across the network with their transactions.
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When the value of this metric is high, it means the ETH blockchain is processing the transfer of a large number of coins right now. Such a trend suggests the investors actively invest in asset trading.
On the other hand, the low indicator implies the interest in the cryptocurrency may currently be low as the holders are only moving around a low amount of ETH.
Now, here is a chart that shows the trend in the Transaction Volume for Ethereum over the last few months:
As displayed in the above graph, the Ethereum Transaction Volume has registered a sharp surge recently, implying interest in the asset has increased alongside the price rally.
This could be considered a constructive development for the cryptocurrency, as an increasing network activity is generally required for rallies to be sustainable.
In the past, some price moves have kicked off sharply, but the Transaction Volume didn’t register much of an increase at the same time. Such moves generally died out before long.
The chart also contains the data for the other metric of relevance here, the “Whale Transaction Count.” This indicator measures the total amount of ETH transfers valued at more than $100,000.
Transactions of this scale are assumed to be coming from the whale entities, so the Whale Transaction Count reflects the activity level of the big-money investors.
From the graph, it’s apparent that this indicator has also spiked for Ethereum recently, which implies that the recent increase in the volume isn’t just a sign of interest from the smaller investors but also the humongous hands.
Naturally, it’s impossible to say based off these indicators alone, whether the investors are buying or selling, as all types of transactions look the same from their view. Because ETH has seen a sharp rally recently, this activity has probably been for accumulation so far.
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The analytics firm explains,
Expect any growth from Bitcoin, during this bull run, to see profits redistribute into Ethereum and potentially push it toward its own all-time high while its network activity looks very healthy.
ETH Price
After observing a surge of more than 27% over the last seven days, Ethereum has broken beyond the $3,150 level.
Featured image from Dall-E, Santiment.net, chart from TradingView.com
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