Key Points
- The taker buy/sell ratio for Ethereum has seen a significant increase, indicating bullish sentiment.
- Ethereum’s recovery is being reinforced by network-wide accumulation and a large outflow of ETH from exchanges.
Ethereum Shows Bullish Signs
The taker buy/sell ratio for Ethereum has recently seen a sharp rise. This metric, which monitors the ratio of taker buy volume to sell volume, suggests a bullish sentiment among traders.
Taker orders are market orders, not limit orders. Traders placing these orders are willing to pay a small premium to execute trades at market prices, which can help assess market sentiment.
Recovery and Accumulation
On July 31, Ethereum was trading at $3.2k. Since July 20, the taker buy/sell ratio had been negative, indicating a bearish sentiment. However, after a market drop on August 5, the market rebound stimulated long positions.
While the metric’s increases on August 8 and August 23 suggest bullish sentiment, they may not necessarily indicate a sustained recovery. The movement of Ethereum from exchanges could provide further insights.
On August 23, a substantial outflow of ETH suggested accumulation. The 14-day simple moving average has resumed the downtrend it was on following the early August price drop, which could push prices towards the $3k resistance zone.
Signs of a Breakout?
The 30-day MVRV has entered positive territory, suggesting short-term holders are seeing marginal profits. Despite this, the 90-day MVRV remains deeply negative. Additionally, the mean coin age has been increasing over the past three weeks.
These factors suggest network-wide accumulation, reinforcing the bullish sentiment suggested by the netflows metric. However, the age-consumed metric has seen a significant increase, indicating increased token movement.
The decrease in network gas fees could mean that the ETH supply could become inflationary over time, which could negatively affect ETH in the long run. This kind of movement often signals a wave of selling. As such, traders should be cautious of selling pressure over the weekend and exercise caution during Monday’s trading session.
