A fresh sell-off could be fast approaching Ethereum, the second-largest cryptocurrency with a market cap of more than $202.3 billion. On-chain indicates that over 50,000 ETH were recently deposited to Binance, significantly raising fears of an imminent liquidation event.
ETH sentiment continues to worsen
Earlier on Thursday, 57,700 ETH flowed into Binance crypto exchange on a net basis. The development has put ETH bulls on their toes, since Binance is, by far, the largest liquidity hub for selling digital assets.
At the same time, the number of new depositors has cratered to 320 addresses, a figure that is significantly lower than the major spikes seen in previous periods. The lack of new investor participation suggests that fresh capital is not entering the market at a meaningful pace.
Rather, the recent rebound in ETH’s price appears to be primarily coming from existing investors. For the uptrend to remain sustainable, a stronger influx of new participants is mandatory.
That said, there are some encouraging signs in terms of ETH’s supply. The issuance rate of new ETH has remained slightly low, with daily issuance hovering around 2,791 ETH. Thanks to the implementation of EIP-1559 tokenomics, ETH’s supply growth remains limited compared to previous cycles.
To explain, EIP-1559 dramatically changed Ethereum’s fee system, so that a base fee from every transaction is permanently burned, removing ETH from circulation instead of giving it all to miners.
This means ETH supply can become deflationary during periods of high network activity, where more ETH is burned than newly issued.
If ETH demand makes a strong comeback, then the supply dynamic could have a positive impact on the digital asset’s price trajectory. However, the ETH price chart still presents a slightly bearish outlook in the short-term.
Analyst says ETH could crash to $1,580
Commenting on ETH’s recent price action, seasoned crypto analyst Ali Martinez remarked that the cryptocurrency is breaking down from its channel and is now trading below its 200-hour simple moving average.
“I’m expecting a move toward $1,580,” Martinez added.
Meanwhile, on Thursday, Ethereum Foundation co-executive director Hsiao-Wei Wang announced that she is stepping down from her leadership role.
Despite all the turmoil, whales continue to stake their ETH holdings, effectively reducing the digital asset’s active circulating supply.
