Similar to Bitcoin, several critical metrics for Ethereum are not looking too great right now. A steep decrease in transactions and exchange withdrawals indicates the bearish pressure may not relent just yet. There is also a positive on-chain exchange flow for ETH and far more outspoken than that of Bitcoin.
Ethereum Transactions Taper Off
As all cryptocurrency markets remain in a rut, people patiently wait for signs of improvement. Those signs may take a while longer to materialize, as the top cryptocurrency networks show no real signs of recovery just yet. Not in the price department, and certainly not where key metrics are concerned for either Bitcoin or Ethereum.
In the case of the latter ecosystem, there is a substantial decline in transactions. Although a one-month low is not necessarily problematic, it indicates the network is of less importance lately. The high transaction fees users often have to pay will not help move these matters along either. No one enjoys spending $40 for a transaction, as those activities should never cost more than $1.
The ongoing decrease in transactions results in 52,170.185 transfers taking place per the seven-day moving average. A steep decline from the over 65,000 transfers not that long ago. For an ecosystem that is home to thousands of smart contracts, decentralized applications, and DeFi solutions, such a drop-off in activity can prove rather problematic.
Coinciding with this decreasing metric is an ongoing decline in exchange withdrawals. Hitting a one-year low during times of extreme volatility confirms most people are keeping their ETH on exchanges for the foreseeable future. That doesn’t signal an intent to sell at current prices, yet it is only a small step to take.
Positive On-Chain Exchange Flow Isn’t Great
As fewer people withdraw funds from exchanges, it is often a matter of time until the on-chain netflow turns positive. For Ethereum, that process is already taking place, even though it affects Bitcoin as well. The difference is how Ethereum’s daily positive netflow is nearly four times as high as Bitcoin’s. A daily influx of an extra $164.9 million in ETH can keep the price subdued with relative ease.
As there are fewer transactions overall – and fewer withdrawals from exchanges – things aren’t looking good for Ethereum. Turning the situation around is not impossible at this rate, yet it appears most people won’t contribute to this change. There is no real incentive to withdraw more ETH from exchanges or conduct more network transactions all of a sudden.
If the positive Ethereum netflow keeps increasing, there may be a significant impact on the ETH price. Although a netflow of just under $165 million is not spectacular, it is a clear sign of more market pressure looming on the horizon. The coming weekend will prove rather interesting, although no one should expect a significant market reversal out of the blue either.