Ethereum exchange reserve shoots up by 163K ETH, here's what other on-chain metrics indicate
|- Ethereum's exchange reserve increased by 163K ETH in the past five days.
- Ethereum has added over 4 million new holders in the past three months.
- Ethereum could bounce near $2,400 support after moving average resistance.
Ethereum (ETH) is down over 2% on Tuesday following an indication of selling pressure due to an uptick in its exchange reserve. However, other on-chain metrics indicate mixed investor sentiment amid ETH's price consolidation.
Daily digest market movers: ETH rising exchange reserve, new holders uptrend
Since August 29, Ethereum's exchange reserve has switched from a downtrend to an uptrend. Exchange reserve is the total amount of a cryptocurrency held in an exchange. An increase in an asset's exchange reserve indicates higher selling pressure and vice versa for a decrease.
According to CryptoQuant's data, Ethereum's exchange reserve increased by about 163K ETH, worth about $407.5 million, in the past five days. As a result, ETH may likely see short-term selling pressure until its exchange reserve starts declining again.
ETH Exchange Reserve
Meanwhile, despite Ethereum's price lag, its total number of holders has been in an uptrend, adding over 4 million new non-empty wallets in the past three months, per Santiment data. This takes the total number of ETH holders to nearly 127 million, meaning new market participants may be betting on an ETH price increase in the long term. In comparison, BTC's total holders declined by 50K during the same period.
ETH vs BTC Total Holders
While the Ethereum holders' count is growing, whale activity within the network has declined considerably from its peak during the market rally in early March. According to Santiment's data, Ethereum's whale transaction count declined from over 115K whale transactions between March 13-19 to 31.8K between August 21 and 27 — only about one-quarter of the March whale transaction count.
The decline is evidenced by the reduced volatility of ETH in the past few months, with the only exception being the market surge on May 20 and the crash on August 5. Whale activity often peaks when volatility increases, noted Santiment analysts.
ETH technical analysis: Ethereum could bounce around key support level
Ethereum is trading around $2,450 on Tuesday, down 2.5% on the day. In the past 24 hours, ETH has seen liquidations worth $26.94 million, with long and short liquidations accounting for $22.13 million and $4.81 million, respectively.
On the 4-hour chart, ETH's upward move was restricted by a convergence of the 200-day, 100-day and 50-day Simple Moving Averages (SMA) in the European trading session. As a result, ETH is attempting a move downward within a key rectangle with support and resistance levels at $2,400 and $2,817, resepectively.
ETH/USDT 4-hour chart
ETH may bounce around the $2,400 support level and stage another move up, but only after potentially liquidating positions worth $40.8 million at the $2,424 level, per Coinglass data.
A move outside the key rectangle will likely determine ETH's next price trend. A breach of the $2,400 support level could send ETH toward $2,111. A successful breakout above the $2,817 level and SMA resistance will see ETH rally toward $3,237.
The Relative Strength Index (RSI) and Stochastic Oscillator's (Stoch) %K line are trending below their midlines, indicating a short-term bearish outlook.
Ethereum FAQs
Ethereum is a decentralized open-source blockchain with smart contracts functionality. Serving as the basal network for the Ether (ETH) cryptocurrency, it is the second largest crypto and largest altcoin by market capitalization. The Ethereum network is tailored for scalability, programmability, security, and decentralization, attributes that make it popular among developers.
Ethereum uses decentralized blockchain technology, where developers can build and deploy applications that are independent of the central authority. To make this easier, the network has a programming language in place, which helps users create self-executing smart contracts. A smart contract is basically a code that can be verified and allows inter-user transactions.
Staking is a process where investors grow their portfolios by locking their assets for a specified duration instead of selling them. It is used by most blockchains, especially the ones that employ Proof-of-Stake (PoS) mechanism, with users earning rewards as an incentive for committing their tokens. For most long-term cryptocurrency holders, staking is a strategy to make passive income from your assets, putting them to work in exchange for reward generation.
Ethereum transitioned from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) mechanism in an event christened “The Merge.” The transformation came as the network wanted to achieve more security, cut down on energy consumption by 99.95%, and execute new scaling solutions with a possible threshold of 100,000 transactions per second. With PoS, there are less entry barriers for miners considering the reduced energy demands.
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