Data from IntoTheBlock revealed that investors withdrew approximately half a billion ETH from centralized exchanges last week, the highest the asset has seen since February.
The withdrawal of large amounts of ETH from centralized exchanges signals investor confidence in the long-term price trajectory of the asset. Market participants usually withdraw their cryptocurrencies from centralized trading platforms to hold the assets in their private wallets or cold storage in anticipation of higher prices.
Such large withdrawals have been considered an indicator of bullish sentiment and holding attitude among investors. Most of the time, ETH has recorded substantial gains in the weeks following large withdrawals from exchanges.
Anticipation for higher ETH prices could be attributed to the approval of spot Ethereum exchange-traded funds (ETFs) in Hong Kong and the just-completed Bitcoin halving event, which has historically triggered bull rallies across the market.
With huge amounts of ETH leaving exchanges, supply could decline on such trading platforms and high demand from large entities like the spot ETF issuers could propel the digital asset’s price upwards, per the laws of economics.
While investors reduce their ETH holdings on centralized exchanges, the Ethereum Futures market shows that it is on the brink of a resurgence of long or short positions. A CryptoQuant Quicktake by pseudonymous analyst Shayan disclosed that the Ethereum market may be on the verge of a fresh and impulsive move either northwards or southwards.
Shayan explained that futures market sentiment significantly impacts price movements because the intensity of long and short positions, as well as the possibility of large liquidations, acts as a catalyst for volatility. This sentiment can be determined by the state of open interest, which indicates the number of open perpetual futures contracts across several cryptocurrency exchanges.
Notably, open interest in Ethereum declined during ether’s recent plunge to $2,900 amid escalated tensions in the Middle East. The fall suggested a pipedown of activities in the futures market.
“Consequently, the market appears poised for the resurgence of either long or short positions, potentially initiating a fresh and decisive market movement in either direction,” Shayan said.