There has been a shift in the Ethereum market, as rising exchange reserves signal a potential new distribution phase coinciding with growing concerns over a death cross.
This is evidenced by CryptoQuant’s Ethereum Exchange Reserve metric, which tracks the amount of ETH held in exchange wallets.
Ethereum in Jeopardy
When the metric rises, it often suggests that traders are moving their ETH onto exchanges, preparing to sell, which can increase supply pressure and contribute to a downtrend. This was seen between June and August, when the metric consistently trended upwards, coinciding with a significant bearish shift in Ethereum’s price.
The situation has become more complex following the death cross, a technical pattern where the 100-day moving average drops below the 200-day moving average, often signaling a long-term downtrend.
In the wake of this development, the Exchange Reserve metric has spiked again, suggesting that a new distribution phase may be unfolding as traders continue to offload their holdings as per a CryptoQuant analyst’s latest observations.
This increase in exchange reserves is a potential red flag, as it indicates that more ETH is available for sale, which could drive prices down further if demand does not pick up.
Poor Sentiment
Spot Ethereum ETFs, which were expected to push the crypto asset’s price higher, witnessed $477 million in outflows since their launch this summer. Adrian Fritz, the research head at 21Shares, which launched a spot Ethereum ETF, said,
“A lot of people were excited until the launch, and then it became a kind of ‘sell the news’ event. With more education and time, you’ll see more excitement around ether as well.”
But the lack of institutional interest isn’t the only factor affecting Ethereum. Brian Rudick, a researcher at crypto trading firm GSR, suggests that the primary reason for the crypto asset’s underperformance is the poor sentiment surrounding its rollup-centric roadmap, particularly after network fees have dropped significantly.
This has led to doubts about Ethereum’s positioning, with some arguing that it’s “stuck in the middle” between Bitcoin, seen as the best store of value, and Solana, considered the leading high-performance blockchain.
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