Traders are withdrawing their assets from ETH derivatives exchanges: What’s next for Ethereum?

ethereum remains under pressure at press time, looking at the formation of the daily chart. In summary, eth is holding steady over the past day, but is down 9% over the past week of trading. It is worth noting that there has been a drastic drop in trading volume over the past few days.

Overall, traders are optimistic and expect prices to quickly turn around and move higher, breaking through immediate local resistances. Even as this happens, on-chain data points to other developments that leveraged traders should keep a close eye on.

Over 40,000 eth transferred from derivatives exchanges

According to one analyst, citing data from CryptoQuant, there have been more outflows from derivatives exchanges in recent trading weeks. Specifically, the analyst eth-on-derivative-exchanges” target=”_blank” rel=”noopener nofollow”>observe that more than 40,000 eth have been transferred from derivatives trading platforms such as Binance and OKX.

From a trading perspective, whenever there is an increase in derivatives outflows to spot markets, this could indicate that traders are cautious and waiting for clearer definitions before committing. However, this is also positive, especially considering that derivatives outflows mean an increase in inflows to spot markets.

When there is an increase in deposits to spot exchanges, especially from derivatives exchanges, not from non-custodial external wallets, the decrease in speculative pressure can support prices. As outflows from derivatives exchanges increase, this indicates that fewer traders are willing to bet on cryptocurrency prices and place leveraged short or long positions.

Based on this development, price action in the coming trading sessions will be critical. Technically, a drop below $2,100 and the August lows may trigger a sell-off, forcing even more leveraged traders to switch to holding mode and move coins to spot and, from there, possibly to stablecoins.

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Conversely, a reversal above $2,800 could lift sentiment and mood, forming a base for another leg up to $3,000 and $3,500. In turn, sentiment will increase, forcing more traders to borrow eth from exchanges as they place leveraged positions.

ethereum gas fees and institutional demand are fading

Amidst this development, ethereum continues to face hurdles. For example, some analysts argue that decreasing gas fees could negatively impact demand, putting the long-term sustainability of the network into question.

As of September 9, ethereum gas fees stood at 2.862 gwei, down from 14.21 gwei recorded a year ago, according to Charts And.

Additionally, institutional demand for ethereum via spot ETFs continues to decline. So far, net outflows from all ethereum spot ETFs in the United States exceed $568 million, according to eth-spot” target=”_blank” rel=”noopener nofollow”>Bland Value.

Featured image from Canva, chart from TradingView