Kraken, the world’s largest cryptocurrency exchange, is advising Ethereum (ETH) investors that several on-chain measures signal more downward pressure on the second-largest digital asset by market capitalization.
According to Kraken on Twitter, a rise in the amount of ETH pouring into exchanges might indicate that bears presently have the upper hand over bulls.
“ETH’s exchange netflows indicate that market players are transferring ETH to exchanges, implying that sell-side demand may be outperforming buy-side demand. If this trend continues, the price of ETH may fall as the supply of immediately marketable coins increases.”
While Kraken is seeing an increase in sell-side pressure on Ethereum, the crypto exchange says that one on-chain statistic indicates that ETH is poised for a comeback.
According to Kraken’s latest analysis, Ethereum’s market value to actual value Z-score (MVRV Z-score) is now in bullish zone. The MVRV Z-score compares an asset’s market value to its realised value and is used to identify overbought or oversold circumstances.
“With ETH down about 37.5 percent from all-time highs, the crypto asset’s MVRV Z-score reading of 1 suggests that ETH has reached ‘oversold’ area and is resuming its upward trend. The MVRV Z-score for ETH reveals that the coin has entered a correction and that trends may soon reverse to the upside, since ETH seldom falls this far into oversold zone before prices recover.”
Additionally, Kraken notes that the influence of current uncertain macroeconomic circumstances may have been priced into the crypto markets, with more stable price action beginning to appear. However, the exchange notes that a modest negative bias remains in place in the crypto markets, with Ethereum now seeming more vulnerable than Bitcoin.
“It’s difficult to predict the future direction of the cryptocurrency markets with certainty. However, on-chain data portrays a little negative picture at the moment. Exchange net position movement metrics indicate that market players may be repurchasing BTC and ETH from long-term holdings and into marketable supplies. Specifically, the exchange net position change for BTC indicates that net flows surged favourably during the majority of January before reversing course in February.
The overall change in BTC’s net exchange position over the last 30 days is currently +$13.5M. ETH’s net position change on exchanges reflects a similar pattern, however, the negative momentum seems to be higher than that of BTC. Over the last 30 days, ETH’s exchange net position change was +$874.5M. Still, BTC’s negative momentum is weakening, whilst ETH’s is accelerating.”
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