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One key on-chain predictor indicates that Ethereum’s native token is headed in the wrong direction.
According to Coinbase numbers, the price of Ether (ETH) jumped from $2,443 to nearly $3,000 on May 20 — a 13.55 percent increase. The quick intraday uptick came a day after ETH’s 27.61 percent price drop. As a result, it boosted expectations that the second-largest cryptocurrency by market capitalisation will rebound in the coming days.
However, prices fell, giving the appearance that the May 20 upside revival in the Ethereum market was merely a “dead cat bounce” — a thin, fleeting turnaround in the price of a dropping commodity that serves as a bearish continuation trend after beginning as a bullish reversal pattern.
The ETH/USD exchange rate painted a matching recovery candle on May 24. The pair increased by nearly 20% to $2,474, after a 37% drop from the closing pace on May 20. The strong bullish rebound indicated another dead cat bounce was on the way, particularly given Ether’s on-chain indicators.
Ether exchange inflow forecasts trouble
The net Ether inflow through all crypto exchanges hit a yearly peak of 199,947 ETH on Sunday, according to Lex Moskovski, chief investment officer at Moscow-based banking service Moskovski Capital.
In retrospect, often traders tend to keep their tokens offline, free from the custody of their exchange. As a result, they only send crypto assets to exchanges when they want to sell or trade them for other tokens. This capital flows are tracked by analytics portals to assess traders’ short-term market bias.
The record ETH inflow into all the crypto exchanges, says Moskovski, should make bulls careful about their upside bets.
“This is the biggest inflow we had this year,” he noted. “If it isn’t an internal [transaction], be careful.”
Bias Conflict in Ethereum Market
Traders sold off their cryptocurrency shares last week, fearing that Elon Musk’s Tesla would do the same.
In the week ending May 19, the billionaire businessman engaged in a Twitter dispute with some of the leading crypto influencers, hinting that Tesla will sell its entire $1.5 billion worth of Bitcoin reserves. He later denied this, claiming that Tesla did not sell any Bitcoin.
Bitcoiners are going to slap themselves next quarter when they find out Tesla dumped the rest of their #Bitcoin holdings.
With the amount of hate @elonmusk is getting, I wouldn’t blame him…
— Mr. Whale (@CryptoWhale) May 16, 2021
Last week, China reaffirmed its plan to clamp down on digital currencies, further fueling the crypto market’s sell-off. Meanwhile, the United States Treasury Department revealed intentions to monitor broader cryptocurrency transfers, and Musk continued to send enigmatic mixed signals.
Traders pushed top altcoin markets by 10% to 30% in either direction based on such changes, bringing Ether into the swing trades as well.
Analysts for ether prices have also written contradictory ETH/USD scenarios. A chart posted by the Crypto Cactus, a pseudonymous market pundit, shows the pair at risk of crashing towards $1,700 if it fell below an intermediate support level around the $2,000 mark.
“ETH is currently hovering around 2,200 USDT, with 2,400 USDT as a short-term resistance level,” detailed Robbie Liu, a researcher at OKEx crypto exchange. “Meanwhile, ETH/BTC has not seen a significant rebound.”
Data shows a jump in open interest, indicating that investors are opening leveraged positions in the Ether derivative market after a $1.87 billion long squeeze on May 19. In the last 24 hours, the cumulative number of outstanding futures contracts increased from $5.1 billion to $5.7 billion.
Derivative traders are majority short on ETH/USD, with their Long/Short ratio lurking at 0.98 as of noon UTC. Ether is currently trading roughly 44% below its record high of $4,384.