Ether (ETH) price over the past week has been holding steady, down a modest 0.1 percent in the time period. At the time of writing it was at $2309, as per data from CoinMarketCap.
However, fresh exchange data from Binance shows that this resilience in the ETH price may not hold for very long.
Ether exchange supply ratio points toward a price slump
Data from Binance, the world’s leading cryptocurrency exchange in terms of trading volume, suggests that ETH may be on the cusp of another downtrend. Specifically, the Ether exchange supply ratio has been trending lower, raising speculation that an accompanying price decline is likely.
For the uninitiated, the Ether Exchange Supply Ratio calculates how much of the total ETH supply is held on exchanges, in comparison to what is held off exchanges.
When the ratio rises, it suggests more ETH is available to sell. On the flip side, a tumbling ratio indicates coins are being withdrawn, reducing immediate selling pressure.
Historically, a decline in the ratio has typically led to a price decline in the digital asset. However, the current dynamics suggest a slightly different picture.
According to the following chart, although the ratio has once again fallen to low levels, the ETH price doesn’t appear to be forming a bottom of any kind. Rather, it seems to have shrugged off the decline in the ratio, holding steady.
As a result, it can be said with certainty that ETH price has not hit a bottom yet. Even though the ETH supply on exchanges might have happened on account of the falling ratio, the market has likely not priced it in yet.
Consequently, it raises the odds of a late downward move. One possible cause behind this lag in price action could be that ETH’s price is being artificially held up. The influence of ETH derivatives hold the power to support ETH’s current price for a while longer.
Bullish undercurrent in the market
Despite the bearish outlook for ETH due to the declining exchange supply ratio, some recent developments suggest that there is a wider bullish undercurrent toward the cryptocurrency in the market.
For instance, the Binance ETH Buyer Taker ratio suggests that traders are leaning slightly bullish despite the digital asset’s lukewarm price action this year. On a year-to-date basis, ETH is down 22 percent.
In addition, institutional interest in ETH continues to grow. Recently, Tom Lee’s BitMine Immersion Technologies scooped up as much as 10,000 ETH sold by the Ethereum Foundation.
To recall, the Ethereum Foundation recently sold 10,000 ETH via OTC at an average price of $2,292.15, with BitMine as the counterparty.
