At the moment, Ethereum is facing downward pressure, as observed in the daily chart formations. To summarize, ETH remains steady over the past day but has dropped by 9% over the last week of trading. It’s important to highlight a significant decline in trading volume witnessed in recent days.
In general, traders are optimistic, anticipating a price reversal that could breach immediate local resistance levels. As this unfolds, it’s crucial for leveraged traders to keep an eye on certain on-chain data developments.
Over 40,000 ETH Transferred From Derivatives Exchanges
An analyst referencing CryptoQuant data reports a noticeable increase in outflows from derivative exchanges in recent trading weeks. Specifically, the analyst notes that over 40,000 ETH has been moved from derivatives platforms such as Binance and OKX.
From a trading perspective, a surge in outflows from derivatives to spot exchanges may indicate that traders are exercising caution, awaiting clearer signals before making commitments. However, this trend is also encouraging, as it means that outflows from derivatives imply corresponding inflows into spot exchanges.
A rise in deposits to spot exchanges, particularly those coming from derivatives platforms and not external non-custodial wallets, can lead to lowered speculative pressure, which may help stabilize prices. The increased outflows from derivatives exchanges indicate that fewer traders are inclined to speculate on crypto price movements, either by taking leveraged long or short positions.
Looking ahead, the way prices behave over the next trading sessions will be crucial. Technically, if ETH falls below $2,100 and the lows observed in August, it could trigger a significant sell-off, forcing more leveraged traders to adopt a preservation strategy, moving their coins to spot exchanges and potentially into stablecoins.
On the other hand, if there’s a rebound above $2,800, it could boost trader sentiment and create a foundation for another rally towards $3,000 and $3,500. This would increase confidence among traders, prompting more to borrow ETH from exchanges to take on leveraged positions.
Declining Ethereum Gas Fees and Institutional Demand
In light of these developments, Ethereum is still encountering challenges. For instance, some analysts suggest that the lowering of gas fees could adversely affect demand, sparking concerns about the network’s long-term viability.
As of September 9, the average Ethereum gas fee was reported at 2.862 gwei, a notable decrease from 14.21 gwei recorded a year ago, according to YCharts.
Furthermore, there has been a noticeable decline in institutional interest in Ethereum through spot ETFs. Currently, net outflows from all U.S. spot Ethereum ETFs have surpassed $568 million, as reported by SosoValue.
Feature image from Canva, chart from TradingView
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