Ethereum’s Potential Upside: Indicators of Limited Demand

• ETH has made an attempt to bounce back, but any rally could be dampened by signs of weak demand.
• Examining the implications of rising exchange reserves and the trends in exchange flows.

Ethereum [ETH] has finally managed to make a slight recovery following last week’s significant sell-off.

Even though there was a minor rebound over the weekend, indicators suggest that this week might not see a straightforward recovery.

After wrapping up September with bearish momentum, the sell pressure on ETH subsided on Thursday with a 15% retracement.

This was succeeded by a modest bullish rally over the weekend, resulting in a 7% recovery from the low points of the previous week.

At the time of writing, ETH was trading at $2477. Its price movements have notably adhered to an upward short-term trend line marked in yellow. The slight recovery thus far suggests some accumulation is occurring.

Source: TradingView

Initially, the weekend rally may appear to signal healthy momentum and potential for further gains in the upcoming days.

However, the money flow indicator for ETH has shown a downturn in the last 24 hours, indicating a possible outflow of liquidity from ETH.

Source: TradingView

The MFI indicates that the recent rally may reflect weak demand. Consequently, the potential for ETH’s upside may be restricted.

Nonetheless, this could change based on the evolving supply-demand dynamics throughout the week.

Can low enthusiasm for ETH impede its upside potential?

The aforementioned insights are in line with the waning interest in Ethereum. This could indicate that ETH might not be the optimal choice for those seeking significant short-term profits.

Additionally, on-chain metrics have revealed a noticeable increase in ETH exchange reserves in the coming days, suggesting potential sell pressure may be anticipated.

Source: CryptoQuant

So, what do the exchange flows indicate about the current state? As per CryptoQuant, ETH’s exchange flows have shifted at the beginning of the month, resulting in decreased volumes.

For instance, exchange inflows peaked at 621,000 ETH at the month’s start, while outflows were slightly lower at 599,778 ETH.

Fast-forward to now, and inflows have seen a drop to 86,173 ETH. Outflows, however, have risen to over 120,000 ETH.

This leads to a net demand of 33,827 ETH, translating to approximately $83.5 million in demand.

Source: CryptoQuant

Read Ethereum’s [ETH] Price Prediction 2024–2025

From the data discussed, it can be concluded that ETH is seeing some level of demand, but it is relatively low.

This suggests a lack of enthusiasm within the cryptocurrency market, indicating a likelihood of muted outcomes.