Ethereum Sees Sparse Spot Flow Amid Recovery Attempts. What Does it Mean?

Ethereum resumed its downtrend on Monday, dropping by almost 2% after showing initial promise of a hike.

The largest altcoin prints a doji at the time of writing, following a recent increase. A closer look at the 1-day chart reveals no significant price change as the bears and bulls maintained almost equal pressure on the asset.

However, the latest price trend indicates that ETH traders have yet to shake off the fundamentals that caused the retracement on Friday. One such is the announcement of new tariffs by the US President.  Although the Supreme Court annulled this development, Ethereum and the rest of the market failed to react on Monday.

Nonetheless, the fear of inflation remains fresh in the wake of the PCE data. The increases in this metric sparked concerns about how it might affect the impending rate cut, and there has been no clarification to allay these fears.

However, the crypto market is seeing significant increases on Tuesday, with value surging by almost 2%. It is also worth noting that trading volume has increased by 8% over the last 24 hours. A review of this data reveals that Ethereum is going against the general market direction.

Ethereum Sees Sparse Spot Flow

Ethereum saw a 14% increase in trading volume over the last 24 hours. The data indicates rising interest in the asset amid stagnant prices.

A review of liquidation information reveals that traders incurred losses exceeding $283 million, with the shorts accounting for more than $171 million. However, market participants lost the most on ETH, in the upwards of $86 million. It is worth noting that bears accounted for almost 60% of the total rekt capital.

Both data show significant interest in the coin, but prices are yet to reflect this. Nonetheless, a recent report explains the reason for the ongoing trend.

The image above is the cost basis distribution heatmap, showing the volume of accumulation or dumping at different price levels. A closer examination of this metric reveals several areas with minimal buying or selling activity. There are notable air gaps within these levels, suggesting that spot flow does not significantly influence ETH’s price.

The report concluded that other factors, such as derivatives, may have a greater influence on Ethereum. 

True to this statement, there has been a recent correlation between the total locked value and the price of ETH. TVL dropped from 36.07 million ETH on Aug 26 to 35.7 million ETH the next day, following the corrections that happened. The metric remained relatively stable over the last 48 hours, reflecting the price as well.

What Does It Mean?

Spot traders have little to no control over ETH’s price at the time of writing. Derivatives and other investment funds, such as the US Ethereum spot ETF, are among the biggest determinants of the coin’s next price action.

Nonetheless, the 1-day chart shows no impending surge at the time of writing. The latest assertion is based on indicators like MACD and the bollinger band. 

The moving average convergence divergence has been in decline since its bearish crossover, and the histogram prints longer bars. Additionally, the bollinger band reveals that the altcoin is trading below the middle band, which is considered bearish.

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