Ethereum (ETH) has had a rough year compared to Bitcoin (BTC), facing mounting challenges as it struggles to keep up with the leading cryptocurrency. The primary reason behind ETH’s underperformance seems to be declining demand amid increased selling activity. However, recent data suggests that this selling pressure might be nearing its end, hinting at a potential turnaround for the second-largest cryptocurrency by market cap.
Selling Pressure On The Decline
On September 7th, data from CryptoQuant revealed that Ethereum’s netflow on derivative exchanges surged beyond 40,000 ETH. This uptick in withdrawals from derivative platforms indicates a significant decrease in selling pressure. Traders appear less inclined to borrow ETH for short selling, suggesting that bearish sentiment is weakening.
Spot Market Continues to Be a Pressure Cooker
Despite the positive signals from the derivatives market, the spot market paints a different picture. The Ethereum Foundation has been active in offloading ETH, trading 450 ETH for $1 million worth of DAI, according to SpotOnChain. Over the past four days, the foundation has sold ETH tokens totaling $1.28 million. Additionally, Metalpha, a Hong Kong-based crypto wealth manager, has deposited over $54 million worth of ETH into Binance in just three days, as reported by Lookonchain.
In contrast, Ethereum’s exchange inflows have been decreasing. As of September 8th, ETH’s exchange inflows dropped to 37,415 ETH, marking the lowest level since late July. This reduction in deposited ETH on spot exchanges could signal that while selling activity persists, its momentum might be diminishing.
Technical Analysis and Price Action
As of the latest update, ETH was trading at $2,319, having gained 0.6% in the last 24 hours. The altcoin has been moving within a descending channel on the daily chart, with the Awesome Oscillator remaining negative, indicating ongoing bearish control. However, Ethereum has formed three consecutive green candles, hinting at a potential breakout.
For a positive shift in momentum, ETH needs to break out to the upside and overcome the current selling pressure. The Relative Strength Index (RSI) stands at 37, placing ETH in bearish territory. A notable development is the RSI’s movement toward crossing above the signal line. If this crossover is confirmed, it could act as a buy signal, suggesting that a reversal might be on the horizon.
Also Read: Ethereum Struggles – ETH Falls 9% In A Week Amid 40,000 ETH Outflows And Declining Gas Fees
Moreover, Ethereum’s funding rates have turned positive, reflecting a cautious optimism among futures traders despite the prevailing bearish sentiment.
While Ethereum has struggled against Bitcoin this year, there are emerging signs that the selling pressure might be easing. With a potential breakout on the horizon and positive shifts in funding rates, ETH traders should keep a close eye on these developments. A confirmed breakout could signal the beginning of a rally, offering hope for Ethereum to regain its footing and close the gap with Bitcoin.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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