Key Points
- Ethereum’s orderbook ratio suggests a potential supply shortage and high demand around the $3,886.76 price point.
- Despite bullish indicators, increased inflow volume into exchanges could indicate potential selling pressure.
Ethereum [ETH] is experiencing a notable bid imbalance within the 0-5% depth range of its order book. This implies a potential supply shortage and high demand around the price level of $3,886.76.
This imbalance is favoring bids by 10%, indicating a stronger interest in buying than selling.
Bullish Sentiment and Trade Volumes
This scenario suggests a bullish sentiment with more traders willing to buy Ethereum at or above the current market price. This could drive prices higher if the trend continues.
There are also spikes in trade volumes that correlate with significant price movements, both upwards and downwards.
This increase in bid dominance, coupled with high trade volumes, could indicate continued bullish momentum for Ethereum. Historical data shows that such imbalances often precede price increases.
Inflow Volume into Exchanges
However, Ethereum has seen a surge in inflow volume into exchanges, with a 208.96% increase over the past 24 hours. This suggests that investors may be moving Ethereum to exchanges to take profits or prepare for potential selling.
The weekly change shows a 17.57% decrease in inflow volume, indicating less Ethereum was moved to exchanges compared to the previous week. This could mean a reduction in selling pressure.
On the other hand, the monthly change increased by 61.49%, suggesting that over the past month, there has been a generally higher inclination to transfer Ethereum to exchanges than in preceding periods.
This influx could temper the bullish outlook suggested by the orderbook ratio. As inflows suggest potential selling pressure, it could lead to a temporary decline in Ethereum prices despite underlying demand signals.
Potential Pullback and Reversal
Considering these factors, Ethereum could be poised for a small pullback before reversing for a bullish trend continuation. It is currently trading around $3689, following a descent from the higher resistance near $4,082.
Trading volume has increased during sell-offs, hinting at a decline. However, with the RSI near the oversold zone, now below 30, it suggests an overextended bear move that could lead to a reversal if buyers step in.
Ethereum falling below 20EMA and 50EMA signals short-term bearish momentum, contrasting with the potential long-term support provided by the 200EMA.
Ethereum is showing signs of testing a key support level at the 200EMA around $3,500, with potential for reversal indicated by an oversold RSI.
High Funding Rates and Market Sentiment
If this level holds, a rally towards higher levels could be expected as funding rates hit a multi-month high. This indicates increased trader confidence and potential anticipation of higher prices.
A spike in funding rates above 0.04% coinciding with price swings represents a sharp increase in trader leverage, often preceding price volatility.
High funding rates suggest strong bullish market sentiment. However, they may lead to short-term corrections due to over-leveraging.
The resurgence of high funding rates, like those in early 2024, shows significant market involvement and optimism. However, this could risk a correction if the market overheats.
