Ethereum (ETH) Continues to Flow Out of Centralized Exchanges

Ethereum (ETH) continues to flow out of centralized exchanges at a significant rate. Over the past seven days alone, net outflows surpassed $380 million, according to blockchain analytics firm IntoTheBlock.

This reduction in exchange-held ETH reflects growing investor accumulation into self-custody and could point to a tightening supply narrative that has historically preceded price rallies.

ETH Accumulation Persists Despite Price Volatility

Data shows Ethereum’s net flows from exchanges were consistently negative between April 24 and May 1, with a particularly large outflow recorded on April 26. This behavior suggests that investors were utilizing short-term price blips to buy and withdraw ETH into self-custody.

Despite price fluctuations throughout the week, ETH ended the period on a positive note, climbing back above $1,840. Analysts interpret sustained exchange outflows as a bullish sign as reduced supply on exchanges lowers the risk of sell pressure and may create the conditions for a breakout if demand increases.

(Chart: Glassnode)

On-chain data also shows that the largest Ethereum holders, known as "whales," are either maintaining their positions or continuing to accumulate, even as the second-largest cryptocurrency has massively underperformed Bitcoin this cycle.

CryptoQuant analyst Darkost pointed out that wallets holding over 100,000 ETH have increased by about 3% since August 2024, which he sees as an indication of “smart money” positioning. He added that since 2020, the proportion of ETH held by large wallets has been gradually decreasing, but now that trend seems to be reversing.

More bullish on-chain data that may be setting up Ethereum for a major rebound

Darkost also noted that the number of active addresses has remained stable despite ETH’s price decline. He observed considerable selling pressure in the derivatives market, although it may be subsiding. Notably, Net Taker Volume went positive on April 23 and 24, which could signal the beginning of a bottoming process if the trend continues.

These metrics run contrary to the “Ethereum is dead” narrative, he said. In essence, despite ETH currently trading around 62% below its 2021 all-time high, on-chain data indicates enduring strength and strategic accumulation.

How to approach ETH

In summary, while some encouraging long-term signals exist, on-chain data still reflects a lingering pessimism around ETH, Darkost concluded. He also noted that open interest has dropped significantly and trading volume remains low, both of which highlight the cautious market sentiment.

The most prudent approach may be to await a clear invalidation of the bearish trend or, at most, engage in a light dollar-cost averaging (DCA) strategy, he said.