Ethereum recoils as ETF outflows, CEX balances rise

Ethereum remained on edge over the weekend as its exchange-traded funds experienced massive outflows, foreign exchange balances increased and staking yield dropped.

Ethereum (ETH) was trading at $3,268, down from last month’s high of $4,104. This price action mirrors the price action of Bitcoin (BTC), which has fallen from its all-time high of $108,000 to below $95,000.

Ether pulled back as data showed demand for its ETFs on Wall Street had fallen over the past few days. According to SoSoValue, all Ethereum funds lost $68 million in assets on Friday after losing $159.3 million on Thursday. They lost $86 million in assets on Wednesday.

These funds currently have over $11.61 billion in assets, representing 2.96% of Ethereum’s market cap. By comparison, Bitcoin ETFs have $107 billion in assets, or 5.2% of market cap.

Meanwhile, Ethereum balances on centralized exchanges have increased this year, according to CoinGlass. The number of ETH tokens on exchanges has increased from 15.30 million on December 30 to 15.8 million currently.

Higher exchange balances are a sign that investors are moving their tokens from their wallets to CEX platforms. Transferring cryptocurrencies to exchanges is often the first step in selling them.

Ethereum balances on CEX exchanges | Source: CoinGlass

Further data shows that Ethereum futures open interest has fallen from its December high of $31.1 billion, a sign that demand is falling. In the last five days, daily open positions have fallen from December’s high of $31.1 billion to $28.4 billion.

On the positive side, Ethereum and other cryptocurrencies often recover when open interest declines. For example, the ETH price began its recent rise in November, when interest dropped to $14 billion.

Meanwhile, Ethereum stakers receive a smaller return. According to StakingRewards, ETH’s staking reward rate is 3.10%, much lower than Solana’s (SOL) 7% and Tron’s (TRX) 4.52%. Ethereum’s staking rewards often decrease as more tokens are transferred to staking pools and fees decrease. As shown below, Ethereum’s fees have been on a downward trend for the past few weeks.

Ethereum fees | Source: TokenTerminal Ethereum price chart analysis ETH price chart | Source: crypto.news

The daily chart shows that ETH price rose as high as $4,104 in December and formed a double top formation with a neckline at $3,520.

It fell below the 50-day moving average at $3,415 and found significant support at the 100-day moving average. Ethereum also found support at the ascending trend line connecting the lowest levels since November 15.

There are signs that the coin is forming a head-and-shoulders pattern, which is a popular bearish sign. Therefore, a decline below the 100-day moving average and the ascending trend line would potentially signal a bearish break towards $2,820, the highest level since August of last year.