Investors are pulling billions of dollars worth of Ethereum off exchanges. This indicates that they expect the price to rise.
The recent approval of Ethereum ETFs likely triggered the 30% price increase before the official approval.
Historically, investors moving crypto off exchanges show a bullish outlook and could influence a rally.
Despite the short-term consolidation, the bulls are actively defending the $3,700 price point, and Ethereum might not break below after all.
The U.S. Securities and Exchange Commission gave the green light to eight spot Ethereum ETFs recently, and a lot has changed before and since.
A week before the final approval of these ETFs on 23 May, Ethereum rallied by a staggering 30%. The cryptocurrency broke above the $3,200 and $3,500 resistances nearly overnight, before hitting a local high of $3,970.
This time around, we have seen some decline in the cryptocurrency, which has brought it into a retest of the $3,700 zone.
However, instead of the bearish takeover that would normally result from this, Ethereum investors have been observed pulling billions of $ETH off exchanges, in hopes of further bullish price action.
Here are all the reasons why the real Ethereum rally has barely started.
This trend was highlighted by analyst, Ali Martinez in a recent tweet.
According to the analyst, since the SEC’s approval of the Ethereum ETFs in late May, around 777,000 ETH (which is equal to a staggering $3 billion) has been pulled off crypto exchanges.
Investors depositing their crypto into exchanges is generally a bearish sign that indicates massive selling.
On the flip side, investors pulling their crypto off exchanges is a massively bullish sign that could indicate a positive switch in sentiment.
The Glassnode chart attached to Ali’s tweet shows that the general exchange balance dropped from around $14.5 billion to a little more than $12.4 billion, which has also had an almost direct correlation with Ethereum’s rallies
Experts generally believe that the Ethereum ETFs will have a massive effect on the price of Ethereum.
And for all intents, they may not be wrong.
Recall that Ethereum started to rally almost a week before the ETFs were finally approved.
This rally took Ethereum up by a staggering 30% within a week and happened around the time when Bloomberg senior ETF analysts, Eric Balchunas and James Seyffart bumped up their approval odds from a mere 25% to 75%.
Ali also reported, right around this time, that the Ethereum whales bought around 110,000 ETH (worth $341 million) within the week of the ETF approvals on 23 May.
This creates a positive correlation of sorts, between the price of Ethereum and the behaviour of its whales.
According to the charts today, Ethereum trades at around $3,754.12, at the time of writing, after increasing by around 0.7% in the last 24 hours,
Ethereum’s price action
According to the chart above, we can see that the bulls are clearly active around the $3,700 zone above, and have been preventing a break below since 21 May.
The massive exchange outflows on Ethereum also contribute to this bullish outlook, indicating that the cryptocurrency is unlikely to break below this crucial $3,700 support.
With this being said, Ethereum's RSI shows that it is currently in bullish territory, despite the short-term bearish influence. This means that the cryptocurrency is set to make another attempt at the $4,000 very soon, as long as a break below $3,700 doesn't occur.
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