Ethereum is still under pressure at the time of writing, looking at the formation in the daily chart. In summary, ETH is stable on the last day, but down 9% in the last week of trading. Notably, there has been a drastic drop in trading volume in the last few days.
In general, traders are optimistic and expect prices to reverse and shoot higher, overcoming local resistance immediately. Even as this plays out, on-chain data points to other developments that leverage traders should keep a close eye on.
Over 40,000 ETH Moved from Derivatives Exchanges
According to an analyst, citing CryptoQuant data, there have been more outflows from derivatives exchanges in the past few trading weeks. The analyst observes that over 40,000 ETH have been moved from derivatives trading platforms such as Binance and OKX.
From a trading perspective, when there is a spike in derivatives outflows to spot exchanges, it might suggest that traders are being cautious and waiting for clearer definitions before committing. However, this is also positive, especially considering that derivatives outflows mean that inflows are increasing to spot changes.
When there is a spike in deposits to spot exchanges, particularly from derivatives exchanges, not from external non-custodial wallets, waning speculative pressure can support prices. As outflows from derivatives exchanges increase, this signals that fewer traders are willing to gamble on crypto prices, by taking leveraged short or long positions.
Reading this development, it will be crucial to see how prices develop over the next few trading sessions. Technically, a drop below $2,100 and the August lows could trigger a sell-off, forcing even more leveraged traders to go into preservation mode and move coins to spot and, from there, potentially to stablecoins.
Conversely, a reversal above $2,800 could improve mood and sentiment, setting a stage for a fresh rise towards $3,000 and $3,500. In turn, confidence will increase, forcing more traders to borrow ETH from exchanges while placing leveraged positions.
Ethereum Gas Fees and Institutional Demand Decrease
Amid this development, Ethereum continues to face headwinds. For example, some analysts argue that falling gas fees could negatively impact demand, questioning the network’s long-term sustainability.
According to Ethereum gas prices, they were at 2.862 gwei on September 9, down from 14.21 gwei a year ago. Y-graphs.
Additionally, institutional demand for Ethereum via spot ETFs continues to decline. Year-to-date, net outflows from all spot ETFs in the United States have exceeded $568 million, according to SosoValue.
Main image from Canva, chart from TradingView