- Declining ELR: Ethereum’s Estimated Leverage Ratio drops, signaling reduced risk appetite and a potential shift to long-term strategies.
- Rising Exchange Inflow: Spikes in Ethereum Exchange Inflow alongside a depressed ELR indicate growing selling pressure in the market.
- Bearish Momentum: Open Interest trends lower post-December 9th, posing a challenge for ETH bulls. Will the $2132 support level hold?
CryptosNewss.com shed light on Ethereum’s underperformance relative to Bitcoin in the past weeks, prompting investors to reassess their short-term ETH holdings. The data revealed that, while BTC gained 14.8% in December, ETH lagged behind with a 11.3% increase.
A key indicator signaling potential concerns is the Estimated Leverage Ratio (ELR), which has steadily declined. This metric, derived by dividing the exchange’s Open Interest by its coin reserve, is a barometer of market participants’ risk appetite. A drop in the ELR suggests reduced willingness to assume risk, potentially indicating a shift towards long-term holding strategies.
Examining the ELR chart from CryptoQuant, it became apparent that the metric had been on an upward trajectory since early September. However, around December 8th, the 14-day Simple Moving Average (SMA) of the ELR started to decline, indicating a diminishing appetite for risk among users.
To provide a comprehensive view, CryptosNewss.com also considered the Ethereum Exchange Inflow. On December 11th and 18th, there was a notable spike in inflows, accompanied by an upward trend in the 14-day SMA. This influx of ETH into exchanges, coupled with the declining ELR, suggests an increasing selling pressure over the past two weeks.
Market sentiment, often gauged by Open Interest (OI), had been bullish, with prices and OI both trending higher from mid-September. However, after December 9th, the 14-day SMA of Ethereum’s OI exhibited a downward slide, even with a spike on December 22nd. This divergence indicated a potential slowdown in bullish momentum.
From a technical standpoint, Ethereum bulls encountered a significant hurdle in establishing the $2300-$2370 range as a solid support zone. The overall inference from these metrics is that Ethereum’s bullish momentum is likely tapering off, leading to a decline in belief in ETH over the past ten days. The critical question now is whether bears can drive prices below the $2132 support level. The next moves in the Ethereum market will undoubtedly be closely monitored by investors seeking clarity amid this shifting landscape.
Disclaimer: Please note that the viewpoints and perspectives expressed by the author, as well as any individuals referenced in this article, are intended solely for informational purposes. They should not be construed as financial or investment advice. It’s important to acknowledge that investing in or trading cryptoassets carries inherent financial risks.