Exchange inflows on Ethereum spiked significantly yesterday, signaling high levels of fear as traders and speculators became concerned about further potential downside while the market was trading lower. As a result, many investors transferred funds from private wallets to exchanges, likely exchanging Ethereum for other assets.
Such liquidations are generally healthy for markets because when fear reaches extreme levels, it often sets the stage for a reversal. Today’s bounce is not surprising, and the recovery looks promising especially if we consider that the drop from December highs unfolded in three waves, with a triangle in the middle, suggesting a corrective pattern.
Additionally, there is an unfilled gap on Ethereum futures at 3350, making this the next important upside level to watch.
