On-chain data shows the Ethereum exchange inflows have declined to low values recently, a sign that could be bullish for the crypto’s price.
The Inflows to the Ethereum 7-day MA Exchange have fallen in recent weeks
CryptoQuant analyst points out that the ETH market has reversed as the PoS merging nears.
The “exchange inflow” is an indicator that measures the total amount of Ethereum moving into wallets of all centralized exchanges.
If this metric rises, it is a sign that many coins are currently being placed on exchanges. This can have a negative effect on the cryptocurrency’s price since investors often transfer their crypto to exchanges in order to sell it.
On the other hand, low values of the indicator can suggest holders aren’t sending in many coins to exchanges at the moment. Depending on whether the holders are withdrawing, or not this could indicate a bullish trend or neutral in terms of ETH’s value.
Here’s a chart showing the trends in the Ethereum 7 day moving average of all exchanges inflows over the past six month:
Source: CryptoQuant| Source: CryptoQuant
The graph above shows that the Ethereum exchange’s inflows grew sharply in June, and reached a peak. The sale also caused significant damage to the price.
Following this surge, the indicator’s value started to observe a decline. Around when the ETH developers announced the 19th September date for the PoS merge, the coin’s price started making recovery as the inflows continued to trend down.
The metric now has very low values. Only one of the 2022 values has fallen below its current level, it was March.
This rock bottom inflow value can suggest that Ethereum could see greater bullish momentum as long as there is still low selling pressure.
The chart also displays data for the “open interest,” another on-chain indicator that measures the amount of positions currently open in the derivatives market.
The ETH position looks to have seen some recent growth. An active futures market can result in higher volatility due to excess of leverage, and in this year so far, high open interest hasn’t been constructive for the crypto’s price.
ETH price
At the time of writing, Ethereum’s price floats around $1.7k, up 12% in the last week. The crypto’s value has risen 56% over the last month.
Below is a chart showing the change in coin price over the past five days.
It seems like crypto's value has been moving sideways in recent times. Source: TradingView ETHUSD| Source: ETHUSD on TradingView
Bastian Riccardi featured image on Unsplash.com. Charts from TradingView.com and CryptoQuant.com.