Ethereum is presently valued at $2,290, showing a slight uptick of $0.17 over the past week. While exhibiting limited activity and hovering around the $2,300 mark for the majority of the week, insights from on-chain data regarding outflows shed light on the prevailing sentiment among traders. According to statistics provided by IntoTheBlock, decentralized exchanges witnessed a withdrawal of $500 million worth of ETH this week, contributing to a total outflow of $1.2 billion over the past month.
Rise in Ethereum Withdrawals from Exchanges
Following the approval of spot Bitcoin exchange-traded funds in the United States, Ethereum experienced an unexpected surge in price. Consequently, numerous on-chain indicators have indicated a robust bullish sentiment, with the second-largest cryptocurrency witnessing significant outflows from exchanges during this period. Outflows were particularly pronounced last week, as reported by IntoTheBlock, contributing a substantial portion to the $1.2 billion worth of ETH withdrawn from exchanges in the past month.
As reported by CryptoQuant, crypto exchanges saw a withdrawal of 1.622 million ETH last week. A corresponding metric from the analytics platform indicates a continuous decline in ETH reserves on exchanges over the past year. As of January 4th, data showed that the total Ethereum deposited across various cryptocurrency exchanges stood at 14.69 million. However, over the past month, this figure has dropped by 397,012 ETH, reaching a record low of 14.296 million ETH at the time of writing.
What Implications Does This Have for the Price of ETH?
Reduced exchange reserves signal a decrease in available ETH for trading, potentially leading to increased scarcity. Both CryptoQuant and IntoTheBlock data suggest that Ethereum may be primed for a price surge due to this scarcity. Currently, Ethereum has seen a 3.21% increase over the past month. However, it has been on a downward trend since reaching a 23-month high of $2,706 on January 12. A significant portion of this decline can be attributed to a $1 billion selloff by Celsius Network to repay its creditors. Additionally, Ethereum faces ongoing competition from other blockchains, with Solana recently surpassing it in terms of daily trading volume on decentralized exchanges.
Observing the present price movement, Ethereum seems to have formed a support level just above $2,280 and is now making a robust effort to surpass this price threshold. As per a cryptocurrency analyst, the current setup resembles a clear replication of a price trajectory in 2021 that ultimately propelled ETH to its current all-time high of $4,878 in the subsequent months.
