Ethereum, the second-largest cryptocurrency by market capitalization, has been under significant pressure in recent weeks. As its price continues to fluctuate, analysts are watching its market signals to determine whether the current phase is an accumulation or distribution phase.
According to a recent analysis CryptoQuant analyst Shayan says the Ethereum Exchange Reserves metric, which tracks the amount of ETH held in exchange wallets, provides information on this.
What is the Ethereum Exchange Reserve signaling right now?
Shayan revealed in an analysis shared in a post on the CryptoQuant QuickTake platform that Ethereum’s exchange reserves indicator showed a clear upward trend between June and August, indicating a distribution phase that contributed to the ongoing downtrend.
This indicator is especially noteworthy given that coins held on exchanges are often considered ready to be sold, which can lead to increased selling pressure.
According to Shayan, the recent “death cross” on the Ethereum price chart, where the 100-day moving average crossed above the 200-day moving average, raised further concerns.
Following this technical signal, the foreign exchange reserves indicator rose sharply, suggesting that another distribution phase may be underway.
The analyst noted that this raise in exchange reserves could indicate a potential drop in demand for Ethereum, which could lead to further price declines. However, Shayan noted that the state of the futures market, a critical factor in pricing, also needs to be analyzed before drawing “final conclusions.”
Stock market reserves signal up-to-date phase of distribution amid death fears
“As Ethereum reserves on exchanges continue to grow, the likelihood of a drop in demand — and therefore a further drop in price — also increases.” – Author @ShayanBTC7
To combine
https://t.co/HKaeDBsss3 photo:twitter.com/K6mMDmtnBH
— CryptoQuant.com (@cryptoquant_com) September 2, 2024
Ethereum Price Action and Market Sentiment
Despite the worrying signals coming from the exchange reserves data, Ethereum managed to record a modest rebound over the past day.
The cryptocurrency has seen a 2.2% raise, bringing its current trading price to $2,515 at the time of writing. However, this raise does little to offset the 7% decline that Ethereum has experienced over the past week.
Well-known cryptocurrency analyst CrediBull, commenting on the recent Ethereum price fluctuations, emphasized that the situation is still developing. excellent:
Nothing has changed here on ETH. We went a bit lower, but OI just went down even more, funding is negative and we just went back to our local lows.
CrediBull suggests that Ethereum could sweep the lows in the direction of local demand before forming a pullback and potentially rising higher.
He also warned against overreacting to short-term volatility, emphasizing the importance of managing risk and sticking to a plan if fundamental market conditions have not changed significantly.
Featured image created with DALL-E, chart from TradingView
