Ethereum Exchange Balance Hits Record Low, Signaling Potential Price Explosion

2 months ago 3

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Ethereum (ETH) has endured a turbulent August, with its price falling by approximately 23% over the past month. The situation reached a low point on August 5 when ETH dropped below $2,200, sparking panic among retail investors before its price rebounded.

Notably, this recovery can be partly attributed to substantial fund outflows from spot exchanges. Data from Cryptoquant shows that since August 5, exchanges have predominantly experienced withdrawals, with only a few days seeing minor inflows.

As of Tuesday, August 20, Ethereum’s exchange balance has reached a historic low, falling below 10% for the first time ever, surpassing Bitcoin. Currently, exchanges hold 18.78 million ETH, worth approximately $50 billion, down from 21.37 million ETH on the same day last year.

Commenting on this development, Leon Waidmann, the lead on-chain researcher at “Onchain Foundation,” noted that the sharp decline in ETH held on exchanges could signal a potential price surge for the cryptocurrency.

“When demand for ETH picks up again, it’s likely that the price will shoot up!” tweeted Waidmann.

Analysts are also closely monitoring other metrics that could signal a positive shift in Ethereum’s price trajectory. Burak Kesmeci from CryptoQuant highlighted a recent turn in the Taker Buy Sell Ratio, which has become positive, indicating a resurgence in buying activity.

Additionally, the pundit noted that the Open Interest (OI) metric in ETH futures reached a record high of $13 billion in June 2024 and decreased to $7 billion following a market correction. While a return of leveraged players is necessary for a significant upward movement, he emphasized that current data suggests a gradual improvement in buyer strength.

“[These] On-Chain Metrics May Indicate We Are in the Late Stages of Ether’s Correction…Current data shows that buyers in Ether are gradually regaining strength. However, time will tell whether this is a temporary rebound or the start of a strong rally led by the bulls.” He wrote.

Meanwhile, analyst Scient identified a crucial support and resistance zone between $2,900 and $3,000. He anticipates a bearish retest in this range but suggests that a breakout above $3,000 could push Ethereum toward $3,300 to $3,400, signaling a potential bullish trend. Conversely, he cautioned that failure to hold this support could lead to further declines.

In addition, analyst Cryptobullet remained optimistic about Ethereum’s future despite recent price struggles, suggesting that Ethereum may consolidate around current levels before launching into a significant rally towards $10,000 in the next market cycle.