How Ethereum’s exchange deposits could aid in an ETH comeback
- ETH exchange deposits increased, pushing the coin price down the charts.
- The altcoin may drop below $1,800 but recovery may not take long.
Net exchange deposits of Ethereum [ETH] hit a five-month high, according to data from IntoTheBlock. The crypto market insight platform disclosed that 127,183 ETH flowed into exchanges on 1 November, making it the highest the network has seen since May.
Ethereum just hit a 5-month peak in net exchange deposits yesterday, with 127,183 ETH flowing into exchanges. The last time ETH recorded a higher number was in May. pic.twitter.com/reYDwuEC5D
— IntoTheBlock (@intotheblock) November 2, 2023
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A deposit into a crypto exchange is an on-chain transaction of transferring an asset from an external source (usually a non-custodial wallet) into an exchange. Inflows like this usually mean that the cryptocurrency in question could risk plummeting in price.
Like in May, ETH falls
For ETH, the price action felt the impact of the flow. At press time, ETH’s value was $1,784. This was because of the 2.72% decrease it experienced in the last 24 hours. In May, when a similar thing occurred, ETH dropped below $1,8000.
But a few weeks later, the altcoin price jumped close to $2,000. The question here is “Can ETH repeat the same performance?”
Well, the information from Ethereum’s Exchange Net Position Change showed that ETH could even drop further.
This was because the metric was in the negative at -132,740. The Exchange Net Position Change shows the monthly position switch of HODLers.
A positive value of the metric means long-term investors are refraining from selling. However, a negative value implies that HODLers are cashing out which was the case with Ethereum.
So, unless accumulation takes over and the metric turns green, the better option might be to expect another price correction.
Fizzling strength, appearing opportunity
Price-action-wise, the ETH/USD 4-hour chart showed that selling pressure was still very present. In fact, the 0.618 Fibonacci retracement showed that there was a strong resistance at $1,813.
Besides that, holders also used the level to take profits. Meanwhile, the 0.786 Fib level, where ETH could trade around $1,778 could serve as a good entry point for traders. This is because this level often reverses a trend.
Thus, if the ETH value hits this point, the trend may reverse upwards. Also, traders need to watch out for the Relative Strength Index (RSI). At press time, the RSI was 43.55. This reading was a sign that ETH’s buying strength has waned.
Read Ethereum’s [ETH] Price Prediction 2023-2024
The RSI drop was also an indication that sellers were in control. Should the indicator reading drop towards 30.00, then ETH would be oversold. Traders may want to watch out for this.
If the RSI falls to 30.00 or close to it, and ETH decreases to $1,778, a long position may be worth opening.