Ethereum has recently experienced a surge in exchange outflows, which could signal a bearish trend in the market. On-chain data reveals that both Ethereum and Tether have seen significant withdrawals from exchanges, indicating that investors are moving their assets into self-custody.
The Exchange Flow Balance metric, which measures the net amount of a cryptocurrency entering or exiting centralized exchange wallets, has been negative for both Ethereum and Tether in recent months. This suggests that holders are making net withdrawals from exchanges, potentially holding onto their coins for the long term.
For volatile assets like Ethereum, a decrease in exchange reserves can have a negative impact on price, making the current trend a bearish signal. On the other hand, stablecoins like Tether, which have a value pegged to the US dollar, are not affected by exchange inflows or outflows in the same way.
Investors often use stablecoins to purchase volatile assets like Ethereum, so large inflows of stablecoins can be bullish for other cryptocurrencies. However, recent data shows that Tether has seen significant net withdrawals, reducing the potential “buy supply” for volatile coins like Ethereum.
The decrease in buying power for future purchases could hinder price increases in the long run, according to Santiment. The market is now facing a mix of bullish and bearish signals, and it remains to be seen how Ethereum’s price will be affected in the near future.
As of the latest data, Ethereum is trading at around $3,300, showing a slight decrease over the past week. The price of the coin has been relatively stable in recent days, indicating a period of sideways movement.
Overall, the recent surge in exchange outflows for Ethereum and Tether could have implications for the wider cryptocurrency market. Investors will need to monitor these trends closely to assess the potential impact on prices and trading activity in the coming weeks.