On-chain data shows that Ethereum exchange net flows have been very positive recently, a sign that selling may be taking place in the market.
Ethereum Exchange Netflows have surged recently.
In a new post on X, CryptoQuant head of research Julio Moreno discussed the latest trends in Ethereum exchange Netflow. “Exchange netflow” here refers to an on-chain metric that tracks the net amount of ETH flowing into or out of wallets on any centralized exchange.
A positive value for this indicator means that the platform is currently receiving a net number of coins. Since one of the main reasons holders deposit their coins on exchanges is for sale-related purposes, this trend could potentially impact the price of the asset.
On the other hand, a negative reading for this indicator means that exchange-related wallets are currently observing net withdrawals. This trend could turn out to be positive for cryptocurrencies as investors can move their coins away from the custody of central authorities for long-term holding.
We now have a chart showing the Ethereum exchange netflow trends over the past few months.
The value of the metric appears to have been quite high in recent days | Source: @jjcmoreno on X
The graph above shows that Ethereum exchange netflow has recently recorded a significant rise. These net deposits are on a scale that can only be seen in March. According to Moreno, most of these deposits were destined for Binance and Bybit.
As mentioned earlier, net exchange inflows can indicate that selling is occurring in the market, but this does not have to be the case. Sometimes large deposits use one of the other services these platforms offer, such as derivatives contracts.
However, in any case, large deposits tend to increase volatility. Looking at the chart, we can see that the indicator assumed high values as investors engaged in profit-taking at the peak of last March’s rally.
Recently, Ethereum has shown a rapid rise thanks to positive news surrounding spot exchange-traded funds (ETFs). Given this rally, profit taking may once again be the target for positive net flows.
However, so far ETH has been successful in preventing this potential sell-off as the price has remained relatively high. However, if deposits continue to flow into these platforms over the coming days, it is unclear how long demand will be able to continue absorbing the selling pressure.
ETH price
Ethereum began its rise last day when its price surpassed $3,950. However, the uptrend was short-lived as the asset returned below the $3,800 level.
Looks like the price of the asset has observed a surge over the last few days | Source: ETHUSD on TradingView
Kanchanara from Unsplash.com, featured image from CryptoQuant.com, chart from TradingView.com