Ethereum’s recent exchange data reveals a notable shift in selling pressure. Despite this, ETH has struggled to recover, primarily due to a decline in demand. This year, Ethereum has underperformed compared to Bitcoin, largely because of increasing selling activity and waning interest from traders.
However, there are signs that the selling pressure might be nearing its end. On September 7th, Ethereum’s netflow on derivative exchanges exceeded 40,000 ETH. This surge in withdrawals from derivative exchanges indicates that traders are less inclined to borrow ETH for short selling, suggesting a potential drop in selling pressure.
Spot Market Dynamics
While the derivatives market shows a decrease in pessimism among Ethereum traders, the spot market tells a different story. The Ethereum Foundation has been actively selling ETH, recently trading 450 ETH for $1 million worth of DAI. Over the past four days, the foundation has sold a total of $1.28 million in ETH tokens.
Additionally, Metalpha, a Hong Kong-based crypto wealth manager, has deposited over $54 million worth of ETH to Binance in the last three days. Despite these significant sales, the amount of ETH being deposited on spot exchanges is decreasing. On September 8th, ETH’s exchange inflows dropped to 37,415 ETH, the lowest level since late July. This reduction in inflows suggests that while sellers remain active, their momentum may be weakening.
Ethereum’s Price Action
At the time of writing, Ethereum was trading at $2,319, reflecting a slight 0.6% gain over the past 24 hours. The altcoin is currently trading within a descending channel on the one-day chart, with the Awesome Oscillator indicating that bears are still in control. However, ETH is showing signs of a potential breakout to the upside after forming three consecutive green candles. If this breakout occurs, it could signal a shift in momentum and the start of a rally.
For this breakout to be successful, buyers need to overpower sellers. The Relative Strength Index (RSI) is currently at 37, indicating that ETH is in bearish territory. However, the RSI line is attempting to cross above the signal line, which, if confirmed, would generate a buy signal.
Market Sentiment and Funding Rates
Ethereum’s funding rates have recently turned positive, signaling growing optimism among futures traders despite the prevailing bearish sentiment. This shift in funding rates suggests that traders are beginning to anticipate a potential rebound in ETH’s price.
Conclusion
In conclusion, while Ethereum has faced significant selling pressure and underperformed against Bitcoin this year, there are emerging signs of a potential shift in market dynamics. The decrease in derivative exchange netflows and the reduction in spot exchange inflows indicate that selling pressure may be easing. Additionally, positive funding rates and technical indicators suggest that ETH could be on the verge of a breakout. However, for a sustained recovery, increased demand and buying activity will be crucial. As the market continues to evolve, traders and investors should closely monitor these trends to make informed decisions.
