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Ethereum is currently trading at $2,290 and is on a marginal increase of $0.17 in the past week. Although lacking much action and trading around $2,300 for most of the week, on-chain data regarding outflows has revealed the current sentiment among traders. According to data from on-chain analytics company IntoTheBlock, $500 million worth of ETH was withdrawn from centralized exchanges this week, bringing the total outflow in the past month to $1.2 billion.
Surge In Ethereum Outflow From Exchanges
Ethereum went on an unforeseen price growth subsequent to the approval of spot Bitcoin exchange-traded funds in the United States. Consequently, various on-chain data have revealed a strong bullish sentiment, with the second largest crypto witnessing outflows from exchanges since this period. Outflows were particularly exacerbated last week, per IntoTheBlock, contributing a larger portion of $1.2 billion ETH withdrawn from exchanges in the past month.
$500M in $ETH was withdrawn from CEXs this week, adding to a total of over $1.2B in outflows in the last month pic.twitter.com/e8NFOGtrDV
— IntoTheBlock (@intotheblock) February 2, 2024
According to CryptoQuant, 1.622 million ETH were withdrawn from crypto exchanges last week. A similar metric from the analytics platform shows the ETH reserve on exchanges has been on a free fall for the past year. As of the 4th of January, the statistics indicated that the total quantity of Ethereum that was deposited with various cryptocurrency exchanges amounted to 14.69 million. This number, however, has decreased by 397,012 ETH over the past month, bringing it down to 14.296 million ETH at the time of this writing, its lowest level ever.
What Does This Mean For ETH Price?
Dropping exchange reserves reduces the amount of ETH available for trading, thereby increasing scarcity. The data from both Cryptoquant and IntoTheBlock indicates Ethereum might be gearing up for a price spike fueled by increasing scarcity.
At the time of writing, Ethereum is up by 3.21% in a monthly timeframe. However, it is important to note that the crypto has been on a downtrend after reaching a 23-month high of $2,706 on January 12. A larger part of this downside can be attributed to a $1 billion selloff by Celsius Network as part of its plans to repay its creditors. At the same time, the cryptocurrency is facing constant competition from other blockchains, with Solana recently surpassing it in terms of daily trading volume on Decentralized exchanges.
Based on the current price action, it appears like Ethereum has established a support level slightly above $2,280 and is now attempting a strong increase above this price point. According to a crypto analyst, the current configuration is an apparent replica of a price movement in 2021 which led to ETH reaching its current all-time high of $4,878 in the months after.
$ETH is apparently repeating the previous chart configuration.🚀#Ethereum #ETH #Altseason pic.twitter.com/AA1PJiN24h
— Trader Tardigrade (@TATrader_Alan) February 3, 2024
Featured image from Adobe Stock, chart from TradingView
