Ethereum’s Potential Bear Market: Insights from Latest Order Book Trends

Ethereum heading for a bear market? Latest order book trends reveal clues

Ethereum [ETH], the dominant alternative cryptocurrency, remains a topic of interest due to its adaptability and extensive adoption within the blockchain industry.

Nonetheless, Ethereum has been displaying weaker performance over extended timeframes for more than five months, prompting speculation about the current state of the cryptocurrency market.

When assessing ETH on a daily basis, the examination reveals that the Combined Books for spot order book depth hit their highest point in May.

This particular measurement, reflecting the peaks in passive limit orders (both bids and asks), frequently indicates the conclusion of a bullish trend, with a subsequent trend shift towards bearish territory.

Historical data lends additional support to this observation, indicating that ETH might have reached its peak during the bull market that terminated in May, potentially transitioning into a phase of consolidation.

Since then, ETH has been fluctuating sideways, lacking a clear trajectory. Does this trend infer a bearish market?

Assessing the Bearish Scenario for ETH

An evaluation of ETH’s price behavior implies the likelihood of a downtrend. The ETH/USDT pairing has been on a downward trajectory since the beginning of June, breaching its range on the daily timeframe amid the market crash on August 5.

Subsequently, it has encountered difficulties in recovering, indicating the potential for a bear market. Nevertheless, the current color of ETH’s price candles is green, signaling a probable rebound towards the $3,000 mark following the aggressive selling pressure.

The price might encounter resistance around the $3,000 threshold. A successful breach and sustained trading above $3,000 could pave the way for a potential upswing. Conversely, a failure to maintain this level and a drop below it would likely confirm the bearish market sentiment.

Further corroborating this outlook, both the Chaikin Money Flow and the Relative Strength Index (RSI) are showing positive trends, suggesting bullish momentum until ETH reaches the $3,000 zone.

Examination of Exchange Balances

A closer inspection of ETH balances on various exchanges raises additional concerns regarding the likelihood of a bear market.

Over the past three weeks, more than 547,600 ETH, valued at over $1.5 billion at the current rate, has been moved to exchanges.

This movement suggests that traders may be capitalizing on profits or cutting their losses, both of which are bearish signals.

Large transfers of ETH to exchanges typically indicate an intention to sell, potentially contributing to downward pressure on prices.

Continued Outflows from BTC & ETH ETFs

Furthermore, the ongoing outflows from Ethereum and Bitcoin ETFs point towards a bearish trend. The net outflow for Ethereum ETFs turned negative, recording outflows of $9.8 million as of September 18, 2024.

Similarly, Bitcoin witnessed outflows totaling $52.7 million, further solidifying concerns about a broader market downturn. Ethereum ETFs have been consistently experiencing outflows, while Bitcoin ETFs turned negative after four consecutive days of inflows.

Such behavior, particularly during significant market phases, hints at a potential bearish sentiment or a phase of consolidation.

While the confirmation of a bear market remains uncertain, these indicators suggest that Ethereum’s price may encounter challenges in trending upwards in the short term unless there is a significant shift in market dynamics.

Leave a Comment