Ethereum (ETH) has experienced a delicate phase in recent weeks, with the asset’s price seeing modest gains, but is still struggling to stay near or above the $3,000 level after a brief rally in August.

According to a recent one analysis from a CryptoQuant analyst, the behind-the-scenes of this ETH price fight were quite fascinating, and the asset saw a significant change in net flow.

This change in Ethereum’s net flow could have significant consequences for ETH, potentially influencing the market reaction positively or negatively.

Ethereum network flow analysis

CryptoQuant analyst Amr Taha revealed in a recent post on the CryptoQuant QuickTake platform that Ethereum has recently seen a surge in network flows, with approximately 96,000 ETH being transferred to derivatives exchanges.

According to Taha, this inflow may indicate that investors are preparing for potential price changes, as immense transfers to derivatives platforms have historically preceded periods of increased volatility and even corrections.

Taha’s analysis, supported by previous spikes in May and early July, suggests that Ethereum’s current activity may herald a period of increased market movement. Analyst wrote:

A recent raise in net flow may signal another period of increased market activity, a potential price correction, or a piercing move based on trader positioning.

Market sentiment taken from Bitcoin

In addition to Ethereum network flows, Taha delved into the Bitcoin futures sentiment index, noting that the index shows sentiment peaks that can serve as indicators of broader market behavior.

He highlighted three instances where the sentiment index rose, marked by red peak circles (in the chart above), each time coinciding with a local market peak. This trend means that after investor sentiment peaks, the price of Bitcoin usually declines.

The sentiment index can therefore serve as a “contrarian indicator” – when optimism peaks, prices often correct. These sentiment patterns could signal that investors should prepare for the potential volatility of Ethereum, which is highly correlated with Bitcoin.

Meanwhile, Ethereum continues to hover somewhere below $3,000. So far, the asset has corrected in the past week, falling 3.1%. However, the previous day’s results appear to be more positive.

During this period, Ethereum saw a slight raise of 0.9%, reaching $2,559 today, and at the time of writing it is trading at $2,541.

Despite the notable swings the asset has seen in the last week alone, rising to over $2,700 and falling below $2,500, Ethereum’s daily trading volume appears to have remained serene.

Data from Coingecko shows that the figure remained between $15 billion and $19 billion last week, with no major increases or declines.

Featured image created with DALL-E, chart from TradingView