Key Points
On-chain data indicates that Ethereum exchange net flows have seen a significant increase recently, suggesting possible selling activity in the market.
Ethereum Exchange Netflows: A Recent Spike
Julio Moreno, CryptoQuant’s head of research, recently shared a post discussing the recent trend in Ethereum’s exchange netflow.
The “exchange netflow” is an on-chain metric that monitors the net amount of ETH moving in and out of all centralized exchanges’ wallets.
When the value of this metric is positive, it suggests that these platforms are receiving a net influx of coins.
This trend could potentially have bearish implications for the asset’s price as one of the main reasons for depositing coins to exchanges is for selling.
Conversely, a negative reading implies that exchange-related wallets are experiencing net withdrawals.
Investors may be transferring their coins away from these central entities for long-term holding, which could prove bullish for the cryptocurrency.
The trend in the Ethereum exchange netflow over the last few months is shown in the following chart:
The graph indicates that the Ethereum exchange netflow has seen large positive spikes recently.
These net deposits, mostly headed towards Binance and Bybit, are on a scale only seen in March, according to Moreno.
While net exchange inflows can suggest selling activity in the market, this isn’t always the case.
Sometimes, large deposits are used for other services these platforms offer, like derivatives contracts.
However, volatility often increases following large deposits.
The chart indicates that the rally top in March saw the indicator reach high values as investors engaged in profit-taking.
Recently, Ethereum has seen a sharp increase, driven by positive news about spot exchange-traded funds (ETFs).
Given this rally, profit-taking could again be the motive behind the positive net flows.
So far, ETH has managed to resist this potential selloff, as its price has remained relatively high.
However, it’s unclear how long demand can continue to offset the potential selling pressure if deposits continue to flow into these platforms in the coming days.
Ethereum Price Trend
Ethereum’s price surpassed the $3,950 mark during the past day, marking an upward trend.
However, this rise was short-lived as the asset fell below the $3,800 level shortly after.
