On-chain data shows huge Ethereum outflows of 60,000 Ethereum on spot exchanges. This could be a bullish sign for the coin.
Ethereum All Exchanges Netflow Shows Big Negative Spike
One CryptoQuant pointed this out PublishYesterday’s net flow on all Ethereum exchanges was negative with 60,000 ETH leaving the exchanges.
The net flow is an indicator that measures the difference between entry and exit of trades.
The “inflow” is the amount of Ethereum entering exchanges from personal wallets. This value increases with an increase in supply.
The “exit”, as it is also known, is the number coins that have left the exchange wallets. If this metric rises, it could indicate that there is more buying pressure in market due to more investors keeping their coins off of the exchanges.
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The net flow is the sum of the inflow and outflow. A positive value means that there is more ETH in exchanges than exits. The opposite is true for a negative value.
Here’s how the net flow chart looks for all Ethereum exchanges.
Source:| Source: CryptoQuant
The chart above shows that the indicator has a negative peak at the moment. But what does this value actually mean for the market?
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As explained above, if the net flow becomes negative, it means that ETH’s net amount is headed for trade and not inward.
Investors might be feeling pressure to buy, and are therefore removing their coins. This could be a sign that the market is bullish.
Will there be an ETH supply shock soon?
Analysts believe that an Ethereum supply shock could soon occur as large amounts of crypto continue being burned after the London hardfork.
The ETH foreign reserve, an indicator that measures the total number of coins held in exchanges, continues to fall, with outflows overtaking inflows.
The price of Ethereum hovers around $ 3.1,000 at the time of writing. This is a decrease of 3% over the last seven days. Below is a chart that shows the trends in cryptocurrency prices over the past three-months.
It looks like ETH is slightly moving up after a downtrend. Source: ETHUSD| Source: ETHUSD on TradingView
The price of Ethereum is dropping right now, which appears to be bearish. However, demand for Ethereum increases only when supply is limited. This could be a bullish sign for the market long-term.
Featured image taken from Unsplash.com. Charts from CryptoQuant.com and TradingView.com.