Key Points
- Ethereum (ETH) has shown signs of recovery but faces potential hurdles due to low demand.
- Increasing exchange reserves and declining interest in ETH could limit its upside.
Following a significant sell-off last week, Ethereum (ETH) has shown some signs of recovery.
However, the recovery might not be smooth due to several factors.
Ethereum’s Recovery and Potential Hurdles
The cryptocurrency ended September on a bearish note, but the sell pressure eased last Thursday after a 15% retracement.
During the weekend, ETH showed some bullish momentum, recovering 7% from last week’s lows.
Despite the recovery, there are signs that liquidity might be flowing out of ETH.
The Money Flow Indicator (MFI) suggests that the recent rally may be due to weak demand, potentially limiting ETH’s upside.
Low Excitement for Ethereum
Declining interest in Ethereum aligns with these findings, hinting that ETH may not be the best option for short-term gains.
On-chain data also shows a sharp increase in ETH exchange reserves, which could lead to more sell pressure.
Data from CryptoQuant reveals that ETH’s exchange flows have slowed down since the start of the month.
For instance, exchange inflows peaked at 621,000 ETH at the start of October, while outflows were slightly lower at 599,778 ETH.
Currently, exchange inflows stand at 86,173 ETH, with outflows slightly higher at over 120,000 ETH.
This indicates a net demand of 33,827 ETH, equivalent to $83.5 million worth of demand.
Despite some demand, the quantity is relatively low, contributing to subdued excitement for the cryptocurrency.
