Ethereum Watch

• Ethereum’s CPI revealed that institutional investors in the USA have reduced their exposure to the altcoin
• On the daily chart, daily traders were spotted distributing their ETH holdings 

Ethereum’s [ETH] Coinbase Premium Index (CPI) recently slipped into negative territory, suggesting that institutional investors in the USA have reduced their accumulation of the altcoin on Coinbase. This, according to findings shared by CryptoQuant’s pseudonymous analyst ‘Greatest Trader.’

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The CPI is a metric that measures the difference between the price of an asset on Coinbase and its price on Binance. When an asset’s CPI value is positive, it indicates strong buying pressure among institutional investors on Coinbase. Conversely, when the CPI metric returns a negative value, less accumulation activity takes place on Coinbase.

Greatest Trader analyzed ETH’s CPI on a 30-day moving average and found that “there has been a substantial shift in sentiment within the U.S. market, as evidenced by the noticeable downward trend in the premium index.”

At the time of writing, ETH’s CPI was negative for the first time over the past month with a reading of -0.0027.

According to the analyst, this shift in sentiment is noteworthy because “numerous U.S. investors are wealthy individuals or institutional entities” and are, therefore, capable of influencing the asset’s price movements. 

Commenting on the impact of the CPI decline on the ETH market, the analyst added,

“This behavior might cast a pessimistic light on ETH’s prospects. It implies that these investors might not be inclined to accumulate ETH within this price range, possibly signifying a bearish sentiment prevailing in the market.”

Not just America…

An assessment of fund flows into digital asset investment products revealed that the year so far has been marked by significant outflows from ETH. 

Although the altcoin touched the psychological $2000-price mark in April, it has since trended south to linger in a narrow range since. This, in a way, has eroded investors’ confidence and has caused negative sentiment to return to the market.

As of 4 August, the year-to-date outflows from ETH totaled $76 million. 

Read Ethereum’s [ETH] Price Prediction 2023-24

Traders continue to look away

At press time, ETH was changing hands at $1,848. Facing strong resistance at $2000, the alt’s price has lingered in a tight range since April. This, due to its statistically positive correlation with Bitcoin [BTC], whose price has lingered between $29,000 and $30,000 since April. 

With waning accumulation among daily traders, key momentum indicators lay below their neutral points at press time. The Relative Strength Index (RSI) was 47.36, while the Money Flow Index (MFI) inched closer to the oversold zone at 26.31.

Signalling increased liquidity exit from the ETH market, its Chaikin Money Flow (CMF) was negative at press time. 

Source