Ethereum, the second-largest cryptocurrency by market capitalization, has been experiencing noteworthy movements in its derivatives markets.
Particularly, according to a recent analysis by a CryptoQuant analyst known as ‘Heisenberg,’ the netflow of Ethereum on derivative exchanges has seen a significant negative shift, exceeding 40,000 ETH.
Ethereum Derivative Market Outflow: What It Means For ETH
Heisenberg explained that netflow refers to the difference between the amount of Ethereum entering exchanges (inflows) and the amount being withdrawn (outflows).
A negative netflow indicates that more ETH is withdrawn from derivative exchanges than deposited. This is particularly relevant because derivative exchanges, such as leveraged positions or short selling, are often used for trading.
A negative netflow of 40,000 ETH, as reported by Heisenberg, could be a signal suggesting that the selling pressure on Ethereum may be reduced, which could lead to a less volatile market in the coming days.
Negative netflow exceeding 40,000 $ETH on derivative exchanges
“Indicates that more ETH is being withdrawn from Derivative Exchanges, which might suggest reduced selling pressure.” – By @3AMRTAHA_
Full post
https://t.co/5v0PWwq9Mw pic.twitter.com/MrE4zRNQro
— CryptoQuant.com (@cryptoquant_com) September 9, 2024
Elaborating on this phenomenon, when more Ethereum is withdrawn from exchanges than deposited, it generally indicates that investors and traders are holding onto their assets rather than selling them.
This reduction in selling pressure is a major metric for assessing the potential stability of Ethereum’s price in the near term. In addition, the reduced borrowing on derivative exchanges might indicate a decreased interest in opening new short positions, further reducing the downward pressure on Ethereum’s price.
ETH Market Performance And Outlook
Notably, the implication of this increased outflow of ETH on derivative exchanges is not reflected in the asset’s market price.
As mentioned earlier, the current trend in this metric signals reduced downward pressure for ETH. However, the asset remains drowning in red according to ETH’s latest price performance.
Particularly, over the past week alone, ETH has still been down by 9.2%. Although the asset has seen a slight 0.5% increase in price over the past day, this was not enough to make ETH’s price see a major recovery.
At the time of writing, the asset currently trades for $2,282, with a 24-hour high of $2,334 and a 24-hour low of $2,246. As for its daily trading volume, this metric has also refused to see a significant increase.
Instead, over the past week, ETH’s daily trading volume has continued to range between $13 billion and $11 billion. According to renowned crypto analyst Ezekiel, “It’s not crypto bottom until ETH drops below 2,000.”
It’s not crypto bottom until eth drops below 2k pic.twitter.com/uSn9uEekcQ
— Ezekiel
(@duje_matic) September 9, 2024
Featured image created with DALL-E, Chart from TradingView
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