- Ethereum flashed conflicting signs about investor interest
- Trade volumes alongside withdrawals from exchanges might be the biggest clue
Ethereum [ETH] fell by 11.5% in five days, falling from $2,738 on Tuesday to $2,426 at press time. During this fall, negative exchange netflows reinforced the idea of accumulation. In fact, 16 May also saw the single largest ETH withdrawal from exchanges since early April.
The rejection from $2.8k was termed a “reset” and not a reversal in another report, but highlighted the threat of profit-taking. Analyst Ali Martinez also noted that a brief correction may be anticipated for Ethereum.
Evidence of higher selling pressure shows Ethereum might drop deeper
Source: CryptoQuant
The Coinbase Premium Index tracked the difference in the price of ETH between Coinbase (USD pair) and Binance (USDT pair). Positive premium values reflect a hike in U.S-based investor interest.
Over the past month, this metric has been positive and it seemed to be rising once again. This alluded to a hike in interest from the United States’ participants, which has been the case from the beginning of the rally, from $1.6k.
Source: CryptoQuant
Despite the positive premium, which generally is a sign of a sustained rally, ETH faced rejection at $2.8k. In fact, the 7-day moving average of the taker buy sell ratio has been falling rapidly over the past week too.
It meant that the taker sell orders vastly outweighed the buy orders. As these are market orders, it implied greater selling pressure in the market. Some holders and traders might have been eager to realize profits, which could have halted the rally. A similar situation occurred in December 2024 – Something investors must be wary of.
Source: CryptoQuant
Finally, the spot volume bubble map showed that trading volume was low during April’s bottom. That’s not all though, as trading volume fell consistently over the last few days too.
The green bubbles indicated a drop in volume, while the size represented the trading volume. December 2024’s trading volume saw a sharp uptick, and this was marked as “overheating.” Subsequently, Ethereum faced a sharp drop.
The cooling trading volume on the approach of the $2.6k-$2.8k resistance zone may be a sign that buyers were wary. It could also be a sign that selling pressure from profit-takers has not been overwhelming. Thus, this finding seemed to reinforce the idea of a “market reset,” instead of a trend reversal