On-chain data shows that ethereum has seen large currency outflows recently, a sign that buying may be taking place in the market.
ethereum Swap Supply Hits Lowest Level in 5.5 Years After $181M Outflow
According to data from the on-chain analysis firm Holy, eth just witnessed its biggest day of currency outflows since August 21. The indicator of interest here is the “supply on exchanges,” which tracks the total amount of ethereum currently held in the wallets of all centralized exchanges.
When the metric value goes down, it means that a net amount of coins are currently leaving these platforms. Typically, investors take their coins out of these central entities and into self-custody wallets when they plan to hold them for long periods of time, so this type of trend may be a sign that HODLing is occurring in the market.
On the other hand, the increase in the value of the indicator implies that deposits are moving towards the exchanges at this time. Investors can make such transfers for various purposes, one of which could be to sell, so sometimes this trend can be a sign that a price correction could soon occur.
There is also a counterpart indicator of the supply on the exchanges: the “off-exchange supply”, which is self-explanatory; Measures the total amount of supply held within self-custody wallets.
Now, here is a chart showing the trend in ethereum supply on exchanges, as well as supply outside of these platforms, over the past few months:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/10/Ethereum-Sees-181-Million-Currency-Outflow-Will-Buying-Continue.jpeg" alt="ethereum Supply on Exchanges” width=”2800″ height=”1795″/>
The value of the two metrics has gone opposite ways in recent days | Source: Santiment on X
As shown in the chart above, ethereum supply on exchanges has seen a sharp drop recently as there has been a large net outflow on these platforms. Naturally, along with this drop came an increase in supply outside of the exchanges, as supply shifted that way.
In these latest withdrawals, investors withdrew 110,000 eth (worth around $181 million at current exchange rates) to self-custody entities, leading to supply on exchanges falling to its lowest point since May of 2018.
These outflows came after the asset’s price recorded a pullback following its recent rise above the $1,700 mark, making it possible that these pullbacks are a sign of a net amount of buying activity occurring across current prices.
In the graph you can see that the supply outside the stock exchanges has been in a perpetual upward trend, regardless of the behavior that the supply on the stock markets has shown.
Obviously, this is due to the fact that new eth is constantly being minted in the form of validation rewards, so the total supply is always increasing. Since the newly created supply is under self-custody, it makes sense that the supply outside of exchanges continues to show overall growth.
eth price
ethereum has been consolidating near the $1,600 level since the failed recovery attempt a few days ago.
<img decoding="async" class="alignnone size-medium aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/10/Ethereum-Sees-181-Million-Currency-Outflow-Will-Buying-Continue" alt="ethereum price chart” width=”1534″ height=”877″/>
eth has been moving sideways since its pullback | Source: ETHUSD on TradingView
Featured image by Kanchanara on Unsplash.com, TradingView.com charts, Santiment.net
