Why Ethereum’s self-custody, exchange data is good news for ETH

Bitcoin Analysis

  • ETH stored off exchanges outweighted the custodial coins.
  • A 50% rally may open if exchange inflow reduces and volatility remains high.

The number of large addresses holding Ethereum [ETH] held on non-exchange wallets tapped a new All-Time High (ATH), AMBCrypto noted.

In the same vein, the top 150 exchange wallets have been decreasing. On-chain data from Santiment also showed that the exchange wallets could be on the verge of hitting the lowest point since June 2018.

At press time, the supply held by the top non-exchange addresses was 43.41 million. This increase is a sign that many market participants are buying ETH at a fast rate.

Also, keeping the altcoin in self-custody and shredding the number held on exchanges means that the intent to sell was almost non-existent.

Ethereum supply of top non-exchange addresses against and the one by exchange addresses

Source: Santiment

Sellers need to take a break

This was evident in Ethereum’s price action. As of this writing, ETH changed hands at$2,261, due to the drawback experienced on the 3rd of January. But with rising accumulation, the coin might be on its way to retest the $2,444 resistance.

If ETH hits and breaks the resistance, there is a high chance that the price will cross the $2,500 mark. In the long term, many predictions agree that the altcoin price would melt faces.

But the projected rally might not happen in the short term. This was because of the exchange inflow and outflow. At the time of writing, ETH’s exchange inflow was 36,000. On the other hand, the exchange outflow was 25,000.

AMBCrypto uncovered that the recent selling pressure Ethereum faced was the reason the inflow outpaced the outflows. If ETH is starting to eye $2,500, then the selling pressure must decrease.

Exchange inflow and exchange outflow

Source: Ethereum

ETH is volatile but promising

Like the exchange flow, the Ethereum seven-day Realized Volatility showed that buying the coin for the short term could be risky. Realized Volatility shows the standard deviation of returns from the mean return of a market.

When the value is low the Realized Volatility indicate a phase of low risk in that market. As a measure of the log returns over a certain window, the metric reading at 58.18% indicated that price fluctuations might be extreme for now.

So, traders targeting short-term gains may need to halt opening long or short contracts for now. If they do, they could end up biting their fingers in regret.

Ethereum realized volatility

Source: Glassnode

However, the mid to long term looks promising for the Ethereum clan. This was confirmed by the state of the Exponential Moving Average (EMA) as shown by the daily chart.

As of this writing, the  50 EMA (blue) had crossed over the 200 EMA (yellow). This position is considered bullish for those planning on HODLing ETH. Should the position remain the same, then ETH may jump 50% in a few months while crossing the $3,000 mark.

How much are 1,10,100 ETHs worth today?

Another indicator considered is the Supertrend. At press time, the Supertrend indicator was below ETH’s price. This confirms the bearish trend initially mentioned.

But as highlighted earlier, the trend is not a sign for traders to open short positions, irrespective of the RSI’s decrease.

ETH's price analysis

Source: TradingView

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