This indicator points to the possibility of further upside.

On-chain data shows that Ethereum indicators are sending bullish signals as the price of the cryptocurrency has surpassed the $2,400 barrier over the past day.

Ethereum has continued to leave exchanges recently.

In a CryptoQuant Quicktake post, one analyst explained the recent relationship between Ethereum price and exchange Netflow indicator data.

Here, “exchange netflow” refers to a metric that tracks the net amount of assets entering or leaving wallets on any centralized exchange. The value of the indicator is calculated by subtracting outflow from inflow.

If the flow has a positive value, then inflows are currently overwhelming outflows and the net number of coins is moving into the custody of these platforms.

One of the main reasons investors deposit tokens on exchanges is for sale-related purposes. This trend could potentially have a bearish impact on asset prices.

On the other hand, a negative indicator means that holders are making net withdrawals from these platforms. This trend suggests that investors can accumulate for the long term, which would naturally make them optimistic about the value of cryptocurrencies.

We now have a chart showing the trend of Ethereum exchange netflow over the past few months and its 14-day exponential moving average (EMA).

The value of the metric seems to have been quite red in recent days | Source: CryptoQuant

As highlighted in the quant in the graph above, the Ethereum price has observed an overall bullish trend over the past few months as 14-day EMA exchange net flows have been mostly in negative territory.

There was a slight spike in positive territory. Cryptocurrencies have typically faced some resistance due to these net deposits, meaning these transfers have added to selling pressure in the market.

Recently, this indicator has been in the red for more than a week in a row, suggesting that investors are continuing to make net withdrawals. Again, the scale of the negative spike was quite large, meaning that some whales were involved.

Thanks to this potential accumulation by investors, Ethereum was observed recovering below the $2,400 level. This rally may not be all there is for the coin, as netflow has continued to be negative recently. There may still be room for further upside.

A spike back into positive territory may be something to watch for. However, if the pattern that has followed over the past few months is to be believed, the cryptocurrency could at least reach a local high.

ETH price

As of this writing, Ethereum is trading at around $2,420, up more than 6% since last week.

Looks like the price of the asset has shot up over the last few days | Source: ETHUSD on TradingView

Featured image by DrawKit illustration from Unsplash.com, chart from TradingView.com, CryptoQuant.com

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