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On-Chain Ethereum Trends Favor Bulls Despite 5% Drop From Local Highs

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  • Santiment, a blockchain analytics firm, recently shared that Ethereum’s NVT is still “bullish”
  • The NVT is the network value to transaction ratio, which is seen as a price-to-earnings ratio for blockchain networks.
  • Data also shows that investors are accumulating ETH en-masse, with coins leaving exchanges at a rapid clip.

Ethereum On-Chain Trends Still Favoring Bulls

Ethereum has undergone a strong drop from its weekly highs around $385. The coin fell under $370 on Tuesday morning as capital flooded from the altcoin market back towards Bitcoin, which has underperformed altcoins over the past six months.

Despite the local, short-term drop, analysts remain bullish on ETH.

One key reason why this is the case is that Ethereum’s on-chain trends are still bullish.

Santiment, a blockchain analytics firm, recently shared the chart seen below. it shows ETH’s price action relative to the network value to transactions metric, which is seen as a price-to-earnings ratio for blockchain networks.

On the current state of the ratio, Santiment wrote that Ethereum is still “bullish” but the trend is moving into “neutral territory.”

Chart of ETH's price action over the past few years with an overlay of the NVT model.
Chart from Santiment, a blockchain analytics firm.

This post comes shortly after the firm noted that a spirit of accumulation has appeared amongst Ethereum holders and investors. Santiment recently reported that the number of ETH held on exchanges has dropped rather dramatically in the past two months, suggesting accumulation:

“$ETH’s top 10 whale exchange addresses have continued swapping their funds to non-exchange wallets, & moving holdings at an impressive rate. The 20.5% decrease in tokens on exchanges the past 2 months indicates price confidence by top #Ethereum holders.”

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Chart of ETH's price action over the past few months with an overlay of the number of top 10 exchange holdings vs. non-exchange holdings.
Chart from Santiment, a blockchain analytics firm.

Not Everyone Is Convinced of Altcoins

Not all investors and analysts in the space are convinced of altcoins such as Ethereum in the current phase of the Bitcoin market cycle, though.

Kyle Davies, a co-founder of crypto fund Three Arrows Capital, recently suggested that Bitcoin is likely to dramatically outpace altcoins. This came shortly after his business partner Su Zhu made a similar comment, suggesting that this is a time for BTC to rally while altcoins sink.

“You’re about to find out why all of the rich OG’s hold mostly $BTC.”

Just today, BTC rallied 2% as Ethereum sunk 2%.

Featured Image from Shutterstock
Price tags: ethusd, ethbtc
Charts from TradingView.com
On-Chain Ethereum Trends Favor Bulls Despite 5% Drop From Local Highs





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Ethereum

Ethereum investment products see largest weekly outflows on record — CoinShares

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Institutional investment managers continued to sell cryptocurrencies like Bitcoin (BTC) and Ether (ETH) last week, though the magnitude of the outflows have declined substantially from previous weeks, offering early signs that the worst of the market sell-off has subsided. 

CoinShares’ weekly fund flows report showed a $21.4 million drawdown over the previous seven days, compared with a $94 million outflow the previous week. Ether products registered their biggest weekly drawdown at $12.7 million. Funds dedicated to ETH had been outperforming Bitcoin in recent months, reflecting pent-up demand for the second-largest cryptocurrency.

All said, institutional investors have been net sellers of digital assets in four of the past five weeks. The period ending May 24 saw the biggest weekly outflow at $97 million, according to CoinShares data.

Related: Record $141M outflow from Bitcoin products signals institutions are bearish on BTC: CoinShares

“While sentiment has weakened over the last month investors on the whole remain committed given the magnitude of inflows seen this year,” the report says, alluding to the fact that crypto investment funds have raised $5.8 billion this year alone. That’s within 13% of the $6.7 billion inflows registered in all of 2020.

As Cointelegraph reported, crypto holdings among institutional managers reached record levels during the height of the bull market earlier this year. Naturally, many investors have been taking profits following the most recent bout of market volatility.

Nevertheless, the weekly fund flows report suggests market sentiment is gradually improving. Case in point: The Bitcoin Fear & Greed Index has rebounded from extreme lows despite remaining on the bearish side. Meanwhile, Bitcoin’s price pierced above $41,000 on Monday, marking a 12% gain as markets eyed recovery above key technical levels. The price of Ether also recovered 9% to hit $2,566.