Ethereum (ETH) Investors May Soon Experience a Reprieve from Recent Selling Pressures, Data Indicates

Despite the price volatility, market sentiment appears cautiously optimistic as evidenced by on-chain and derivatives metrics.

Despite a turbulent crypto market, analysis of on-chain and derivatives metrics reveals a glimmer of optimism among Ethereum (ETH) investors.

Fresh data shows a decline in ETH balances on major cryptocurrency exchanges, indicating that traders are largely pivoting away from selling their ETH holdings in the immediate future. This trend could potentially stabilize prices in the upcoming period.

Ethereum (ETH) Selling Pressure Easing

According to data from blockchain analytics firm Glassnode, the amount of ETH held on exchanges has notably decreased over the past two months. Exchange-held ETH has dropped from 13.34 million to 12.21 million ETH.

When traders and investors withdraw their ETH from exchanges to private wallets or decentralized platforms, it usually indicates that they are not planning to sell in the immediate future. This is because moving ETH off exchanges makes it harder to sell quickly.

However, it's worth noting that this data point on its own does not definitively indicate whether traders are preparing to buy or sell. To gain a clearer understanding of the traders' intentions, it's crucial to analyze it in conjunction with other on-chain and derivatives metrics.

This reduction in exchange balances comes as ETH experienced volatility, dropping by 18% from July 1 to July 8, with lows of $2,826 before recovering to approximately $3,122 at the last check. During this period, the market saw liquidations of over $300 million in leveraged long positions, contributing to the market uncertainty.

Institutions Eyeing ETH, Exchange Traded Fund (ETF) Launch

Despite the price volatility, analysis of on-chain and derivatives metrics reveals a cautiously optimistic market sentiment.

In the derivatives markets, there is a strong preference for call (buy) options over put (sell) options, with demand for call options being double that of put options. This preference indicates bullish sentiment among traders, suggesting confidence in ETH’s potential recovery and future price growth.

Furthermore, around 40% of ETH's circulating supply is currently locked in staking and decentralized applications (dApps), indicating a strong commitment from investors to hold their ETH rather than sell in the short term.

In a key development, decentralized computing platform Golem, a large ICO-era ETH holder with ETH, recently paused their selling activities after a liquidation spree. According to reports, Golem proceeded to stake 40,000 ETH ($124.6 million), highlighting the trend of major holders opting to hold rather than liquidate their assets.

Analyst Leon Waidmann highlighted the significance of this trend, pointing out that institutional interest is expected to rise with the imminent launch of an ETH Exchange-Traded Fund (ETF).

This institutional demand, coupled with shrinking exchange supplies, could potentially support ETH's price stability and pave the way for a future rally.

Ethereum’s Ecosystem Strength, Layer-2 Solutions

Ethereum's total value locked (TVL) remains steady at 17.7 million ETH, indicating continuous activity within its dApp ecosystem and layer-2 solutions.

Over the past month, Ethereum's layer-2 solutions such as Arbitrum, Blast, and Base have shown substantial growth in transaction volumes, outpacing competitors like BNB Chain and Solana in terms of activity.

As the crypto market adjusts, traders are expecting a potential price recovery above previous support levels, expecting ETH to surpass its yearly all-time high (ATH).

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