Ethereum’s recent price rally may be on shaky ground, according to analyst “Crypto Lion” at “Quicktake” on blockchain analytics platform CryptoQuant. The analyst warned that a correction may be imminent, citing data that suggests a lack of genuine demand for Ether despite the recent rally driven by the approval of the ETH ETF.
Crypto Lion highlighted the lack of demand for Ether, citing “exchange withdrawal transactions” that are significantly out of step with the digital asset’s price trajectory. “This means that physical withdrawals are declining, so it’s safe to assume that there’s simply no demand,” the analyst said:
“This means that physical withdrawal volumes are declining, so it is safe to assume that there is simply no demand.”
According to Crypto Lion, the price of Ether is rising due to the estimated leverage ratio (ELR) of ETH, which saw a huge increase just before mid-May, when the ETH ETF was approved. The analyst explained the reasons for the increase in ELR.
The formula for ELR is Open Interest/ETH Exchange Reserve, and according to Crypto Lion, ELR spiked even before the reserve was reduced. This spike was due to a jump in open interest, “meaning that a large number of vertical shares were loaded and the implied leverage increased dramatically,” Crypto Lion said, adding:
“ETH price moves in a range after ETH ETF approval. However, in the absence of Withdraw and until ELR is decided, it is recommended to refrain from buying.”
Bitcoin, the leading digital asset, has fallen more than 4% in the last 24 hours. On the other hand, ETH has fallen only 1.5% and is currently trading at $3,316 with a 59.39% increase in trading volume, which is $17.3 billion, according to CoinMarketCap data.
Spot ETH ETFs saw outflows of $98.29 million on July 29, bringing the total net outflow to $439.64 million, according to SoSoValue. More than $1.72 billion left Grayscale ETHE, while BlackRock’s ETHA saw an inflow of $500 million.
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