Ethereum price It resumed its downward trend On Friday, May 22, after holding tight all week. As a result of this distribution round, the second largest cryptocurrency fell by approximately 6.2%, forming a local bottom at $2,020.
Although Ethereum has an ostensibly bearish structure, a recent on-chain analysis revealed noticeable buying activity in its market. However, Ethereum’s price weakness appears to be almost unverified – here are the details of its current on-chain dynamics.
Spot buyers step in, but ETH continues to fall
In a recent Quicktake post on the CryptoQuant platform, on-chain analyst Carmelo Alemán shown Factors behind Ethereum’s current price weakness. In the analysis, Aleman revealed that the current downward trend of the altcoin is not due to a lack of demand in the spot market.
In fact, Spot Taker CVD reflects that the Ethereum spot market is still Taker Buy dominant, Alemán stated. This means that buyers active in the market execute more buy orders than sellers execute sell orders during a given period.
Source: CryptoQuant
Despite this, the Ethereum price does not appear to be gaining much strength from a broader perspective. When the Spot Taker CVD flashed the above sign, the price of ETH actually dropped from $2,339 on May 11 to $2,065.8 by May 22.
However, it should be noted that spot trading activity has also contracted sharply since May 11, with spot volume reportedly declining from approximately 470,770 ETH to 256,963 ETH (a decline of over 45%); This represents a 52.65% decrease from approximately $1.10 billion to $521.4 million.
Derivatives and stock exchange activity are showing mixed signals
Moreover, the cryptocurrency analyst noted that the Ethereum derivatives market has yet to show strong conviction in bullish trader behavior. “Open interest is moving sideways: from $15.43 billion to $15.54 billion, barely +0.69%,” Aleman noted.
While this is the case, CVD futures still indicate a dominance of long positions, suggesting that many participants continue to bet on a bounce. Interestingly, Aleman noted that funding rates have also remained positive since May 11, meaning that long traders are paying short traders to maintain their positions.
In addition to the list, an on-chain analyst revealed that Ethereum’s cumulative Netflow reading was also negative, near -80,507 ETH. This means that more ETH was withdrawn from exchanges than was sent to them.
Normally, this should be it A bullish sign for Ethereum priceSince coins that are moved away from exchanges are often held for storage and not for sale, which is typical of high net inflows. However, Ethereum price failed to gain upward strength.
Aleman stated that Ethereum’s current trend can only be due to more supply being available for sale compared to the current demand. This absorbs the upward pressure that would otherwise rise from the spot and futures markets.
The analyst concluded:
Until ETH regains spot volume, breaks resistance, and confirms a healthy expansion in derivatives, bearish pressure is very likely to remain dominant. In the short term, the price seems to be heading towards the $1,984 support level, and if it is broken, the next stop could be the $1,937 support level.
As of this writing, Ethereum is at $2,114, up more than 2% over the past day.
The price of ETH on the daily timeframe | Source: ETHUSDT chart on TradingView
Featured image from iStock, chart from TradingView
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