Throughout the previous week, Ethereum [ETH] has witnessed significant price fluctuations, hitting a bottom of $2150 and a peak of $2891.
However, in the last three days, the alternative coin has sustained an upward trend, soaring from $2,633 to $2,850. At present, Ethereum is being traded at $2,838, showing a 3% increase on daily charts.
Prior to these price surges, the altcoin had been on a downward trajectory, declining by 11.06% on weekly charts and 22.61% on monthly charts.
The sudden reversal in the trend, with three consecutive days of gains, signifies a shift in market sentiment from pessimistic to optimistic. This optimism is validated by the substantial negative netflows of ETH.
Ethereum Encounters Negative Netflows
As indicated by CryptoQuant, Ethereum’s Exchange Netflow for derivative exchanges has witnessed a reduction of nearly -60k ETH for the second time within a week.
Such significant negative netflows suggest that investors are actively withdrawing ETH from derivative exchanges.
When netflows become negative, it indicates that traders are actively accumulating, with outflows surpassing inflows.
In history, such a notable drop indicates a decrease in selling pressure from closing large positions, signifying positive sentiments in the medium term.
Therefore, based on this market behavior, it is reasonable to assume that traders have shifted towards an optimistic outlook and anticipate a recovery in ETH prices.
Interpretation of ETH’s Charts
With Ethereum’s netflow indicating a change in market sentiment, this transformation is evident across various charts.
For instance, Ethereum’s Buyer-Taker-Sell Ratio has surged and exceeded 1 in the past two days, settling at 1.06. This indicates a higher buying activity compared to selling, reflecting increased buying interest.
This surge in buying activity is particularly prominent in the U.S. market, where the Coinbase premium index has turned positive.
Following a period of negativity, traders on Coinbase are now accumulating ETH after the recent dip.
In addition, this positive sentiment is observed across other exchanges, depicted by the declining supply ratio.
The ratio has dropped to a yearly low of 0.13, indicating a higher number of ETH withdrawals from exchanges compared to inflows, the highest seen in the past year.
Potential for a Sustained Uptrend in ETH
The shift towards bullish market sentiments positions ETH well for a sustained recovery.
This is confirmed by the bullish crossover of Ethereum’s Stoch RSI in the recent period, symbolizing a continuous upward momentum for ETH.
The altcoin’s RSI has risen from 31 to 37, while its Moving Average (MA) stood at 41. Another bullish crossover in the RSI would affirm the uptrend, resulting in further gains for ETH.
Observing favorable conditions in ETH’s price charts, if these sentiments persist, Ethereum is likely to break the $3,000 mark.
A breach of this level would strengthen the altcoin’s position, potentially leading to a push towards $3,300, where significant resistance is anticipated.
Despite the increased volatility in the past week, failure by bulls to maintain market control amidst unfavorable macroeconomic developments could lead to a dip to $2,720. A breach below this level might push it further down to $2,563.