Is Ethereum Headed For Trouble? Analyst Warns Of Surging Exchange Reserves

Samuel Edyme

9 months ago

3 mins read

Is Ethereum Headed for Trouble? Analyst Warns of Surging Exchange Reserves

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Ethereum, the second-largest cryptocurrency by market capitalization, has been under significant pressure in recent weeks. As its price continues to fluctuate, analysts have been observing its market signals to determine whether the current phase is one of accumulation or distribution.

According to a recent analysis by CryptoQuant analyst Shayan, the Ethereum exchange reserve metric, which tracks the amount of ETH held in exchange wallets, is providing insights into this question.

What Does The Ethereum Exchange Reserve Currently Signals?

Shayan disclosed in the analysis shared in a post on the CryptoQuant QuickTake platform that the Ethereum exchange reserve metric has shown a notable upward trend between June and August, indicating a distribution phase that has contributed to the ongoing bearish trend.

Ethereum exchange reserve on all exchanges. | Source: CryptoQuant

This metric is particularly noteworthy given that coins held on exchanges are often considered ready for sale, which can lead to increased selling pressure.

According to Shayan, the recent “death cross” on Ethereum’s price chart, where the 100-day moving average crossed below the 200-day moving average, has raised further concerns.

Following this technical signal, the exchange reserve metric has risen sharply, suggesting that another distribution phase may be unfolding.

The analyst noted that this increase in reserves on exchanges could point to a potential decrease in demand for Ethereum, which might lead to further price declines. However, Shayan noted that the state of the futures market, a critical factor in price determination, must also be analyzed before making “definitive conclusions.”

Exchange Reserves Signal New Distribution Phase Amidst Death Cross Concerns

“Ethereum reserves on exchanges continue to grow, the likelihood of a decrease in demand—and consequently, a further price decline—also increases.” – By @ShayanBTC7

Link 👇https://t.co/HKaeDBsss3 pic.twitter.com/K6mMDmtnBH

— CryptoQuant.com (@cryptoquant_com) September 2, 2024

Ethereum’s Price Action and Market Sentiment

Despite the concerning signals from the exchange reserve metric, Ethereum has managed to stage a modest recovery over the past day.

The cryptocurrency has seen a 2.2% increase, bringing its current trading price to $2,515 at the time of writing. However, this uptick does little to offset the 7% decline Ethereum has experienced over the past week.

Ethereum (ETH) price chart on TradingView — ETH price is moving downwards on the 1-hour chart. Source: ETH/USDT on TradingView.com

Renowned crypto analyst CrediBull, commenting on Ethereum’s recent price action, emphasized that the situation is still evolving. He noted:

Nothing has really changed on ETH here. We went a bit lower, but OI has simply decreased even more, funding is negative, and we are simply back at our local lows.

CrediBull suggests that Ethereum might sweep the lows into local demand before forming a deviation and potentially moving higher.

He also warned against overreacting to short-term volatility, stressing the importance of managing risk and sticking to plan if the fundamental market conditions haven’t significantly changed.

Featured image created with DALL-E, Chart from TradingView

Samuel Edyme

Meet Samuel Edyme, Nickname - HIM-buktu. A web3 content writer, journalist, and aspiring trader, Edyme is as versatile as they come. With a knack for words and a nose for trends, he has penned pieces for numerous industry player, including AMBCrypto, Blockchain.News, and Blockchain Reporter, among others.

Edyme’s foray into the crypto universe is nothing short of cinematic. His journey began not with a triumphant investment, but with a scam. Yes, a Ponzi scheme that used crypto as payment roped him in. Rather than retreating, he emerged wiser and more determined, channeling his experience into over three years of insightful market analysis.

Before becoming the voice of reason in the crypto space, Edyme was the quintessential crypto degen. He aped into anything that promised a quick buck, anything ape-able, learning the ropes the hard way. These hands-on experience through major market events—like the Terra Luna crash, the wave of bankruptcies in crypto firms, the notorious FTX collapse, and even CZ’s arrest—has honed his keen sense of market dynamics.

When he isn’t crafting engaging crypto content, you’ll find Edyme backtesting charts, studying both forex and synthetic indices. His dedication to mastering the art of trading is as relentless as his pursuit of the next big story. Away from his screens, he can be found in the gym, airpods in, working out and listening to his favorite artist, NF. Or maybe he’s catching some Z’s or scrolling through Elon Musk’s very own X platform—(oops, another screen activity, my bad…)

Well, being an introvert, Edyme thrives in the digital realm, preferring online interaction over offline encounters—(don’t judge, that’s just how he is built). His determination is quite unwavering to be honest, and he embodies the philosophy of continuous improvement, or “kaizen,” striving to be 1% better every day. His mantras, “God knows best” and “Everything is still on track,” reflect his resilient outlook and how he lives his life.

In a nutshell, Samuel Edyme was born efficient, driven by ambition, and perhaps a touch fierce. He’s neither artistic nor unrealistic, and certainly not chauvinistic. Think of him as Bruce Willis in a train wreck—unflappable. Edyme is like trading in your car for a jet—bold. He’s the guy who’d ask his boss for a pay cut just to prove a point—(uhhh…). He is like watching your kid take his first steps. Imagine Bill Gates struggling with rent—okay, maybe that’s a stretch, but you get the idea, yeah. Unbelievable? Yes. Inconceivable? Perhaps.

Edyme sees himself as a fairly reasonable guy, albeit a bit stubborn. Normal to you is not to him. He is not the one to take the easy road, and why would he? That’s just not the way he roll. He has these favorite lyrics from NF’s “Clouds” that resonate deeply with him: “What you think's probably unfeasible, I've done already a hundredfold.”

PS—Edyme is HIM. HIM-buktu. Him-mulation. Him-Kardashian. Himon and Pumba. He even had his DNA tested, and guess what? He’s 100% Him-alayan. Screw it, he ate the opp.

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