Ethereum, one of the top cryptocurrencies, has seen a significant price surge recently, but some analysts are warning that this upward trend may not be sustainable. According to analyst ‘Crypto Lion’ on blockchain analytics platform CryptoQuant, there may be a lack of genuine demand for Ether, despite the recent gains driven by the approval of ETH ETFs. The analyst pointed out that the “Exchange Withdrawing Transactions” are diverging significantly from Ether’s price trajectory, indicating a decline in physical withdrawals and suggesting a lack of demand for the digital asset.
Crypto Lion also highlighted the Estimated Leverage Ratio (ELR) of ETH as a factor driving the price higher. The ELR, which is calculated as Open Interest divided by ETH Exchange reserve, saw monumental gains just before mid-May when the ETH ETF was approved. Even though the reserve decreased, the ELR rose sharply due to a spike in Open Interest, indicating a high level of leverage in the market. The analyst advised caution in buying Ether at this time, especially in the absence of withdrawals and while the ELR remains unresolved.
While Bitcoin, the leading cryptocurrency, experienced a crash of more than 4% in the past 24 hours, ETH only dropped 1.5% and is currently trading at $3,316 with a substantial surge in trading volume. Data from SoSoValue shows that spot ETH ETFs have witnessed significant outflows, with over $98 million leaving on July 29 alone, bringing the total net outflow to $439 million. Grayscale’s ETHE has seen over $1.72 billion in outflows, while BlackRock’s ETHA has recorded $500 million in inflows.
It is important to note that the information presented in this article is for informational and educational purposes only and does not constitute financial advice. Readers are advised to exercise caution and conduct their own research before making any investment decisions. Coin Edition is not responsible for any losses incurred as a result of utilizing the content, products, or services mentioned in this article. It is always recommended to seek advice from a qualified financial advisor before making any investment decisions in the volatile cryptocurrency market.
