In the past week, the continuous negative net cash flow for Ethereum is showing positive signals about future price trends. These figures clearly reflect the level of buying and selling and investor sentiment towards this digital asset.
Ethereum Network Cash Flow is Volatile
Net cash flow represents the difference between the amount of ETH deposited into and withdrawn from cryptocurrency exchanges over a certain period. When net cash flow is positive (more ETH is being deposited than withdrawn), it may indicate that investors are preparing to sell – usually to take profits after a price increase. Conversely, when net cash flow is negative, more ETH is being withdrawn from exchanges than deposited, indicating stronger buying pressure than selling pressure – a positive signal for price.
According to the latest data, Ethereum's net cash flow has been negative for 6 out of the last 7 days, with a total value reaching -$140 million. This proves that investors tend to withdraw ETH from exchanges rather than prepare to sell – indicating a strong buying sentiment.
Contradictions in Time Frames
However, if we look at a longer time frame, such as the past 15 days, the net cash flow has turned positive with a total value of $186.48 million. This indicates that during that period, investors still prioritized selling ETH – which may be why Ethereum has not kept pace with Bitcoin's strong upward trend at the same time.
Considering the 30-day time frame, the net cash flow still shows a strong inflow into exchanges with a total value of $483.54 million, indicating that selling pressure may have dominated during this period.
Bullish Scenario: What Will Happen If Cash Flow Remains Negative?
If the trend of negative net cash flow continues, this will reflect a significant increase in buying pressure. When buying pressure is strong enough to overcome selling pressure, the price of Ethereum could very well begin a new upward cycle.
According to insights from cryptocurrency market analyst Captain Faibik, the bulls are trying to reclaim the 200-day moving average (200-Day SMA) around the $2,700 level. If successful, he expects the price of Ethereum could soar above $4,000 in the near future.
Summary
Although in longer time frames, Ethereum is still under selling pressure, the negative net cash flow data in the short term is a positive sign. Investors are withdrawing ETH from exchanges, showing confidence in price growth in the near future. If this trend continues and is combined with technical indicators such as the 200-day SMA being conquered, Ethereum could completely regain and surpass the $4,000 mark in the next upward cycle.
