Ethereum outflow drops to its lowest level in 4 years…what does that mean?


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According to data provided by Glassnode and WuBlockchain, Ethereum outflows from exchanges have reached a four-year low, which may confuse some traders and investors because the outflow indicator is still one of the main ways to identify trends in the crypto market.

Why does the small volume of Ethereum outflow from the “Outflow” exchange confuse some?

As many blockchain and crypto market analysts note, outflow volume is often used as a leading indicator of an upward trend.

As the outflow volume increases (it comes out of the trading platforms for external portfolios), the selling pressure on the market decreases, which directly affects the price of the asset positively.

While the opposite is in the case of a decrease in the outflow volume, it is possible to increase the selling pressure on the market at any time, which negatively affects the price of the asset.

In addition to the outflow volume, traders use exchange reserve indicators that tend to correlate with outflow volumes.

In the case of Ethereum, the Outflow volume has dropped significantly, which some traders might consider a bearish signal, although it is not necessarily the case.

The low outflow may be related to the fact that the Ethereum reserves in the exchanges are already very low and the number of traders or investors who keep their funds in the exchanges has reached record lows.

If the majority of traders and investors do not hold the major portion of their Ethereum coins in exchange wallets, the Outflow volume will surely decrease until the Ethereum exchange reserves are restored to normal.

Ethereum performance:

Ethereum remains one of the strongest cryptocurrencies in terms of annual gains, with gains of over 40% in the past three months.

After a major correction in the cryptocurrency market, Ethereum has become more valuable among investors, thanks to its relatively neutral performance in the past two weeks.

While the majority of cryptocurrencies in the market have lost as much as 30% of their value, Ethereum has gone through an 8% correction and is now consolidating at the $4,000 support.

Read also:

Beware of malware targeting cryptocurrency wallets through “Telegram”

Charles Hoskinson Presents Cardano’s Roadmap for 2022… Get to Know It!

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