On-chain data shows the Ethereum exchange deposits have hit an 8-month high, a sign that could be bearish for the cryptocurrency’s value.
Ethereum Active Deposits Metric Has Observed A Surge Recently
According to data from the on-chain analytics firm Santiment, the current values of the indicator are the highest since the Merge back in September 2022. The “active deposits” is an indicator that measures the total number of Ethereum addresses that are taking part in an exchange deposit transaction.
This metric only tells us about the unique number of such addresses, meaning that if an address takes part in more than one deposit transaction, its contribution to the indicator’s value is still only one.
Setting this restriction provides a more accurate representation of the trend in the wider market, as the unique number of addresses can be thought of as the number of users participating in these transfers. Without this limitation, just a few traders making a large number of back and forth transactions could skew the metric.
When the indicator has a high value, it means a large number of addresses are getting involved in deposit transactions right now. As one of the main reasons why investors deposit to these platforms is for selling-related purposes, this kind of trend can have bearish consequences for the price.
On the other hand, low values of the metric imply not many investors are making deposit transfers currently. Such a trend can suggest there aren’t many sellers in the market at the moment.
Now, here is a chart that shows the trend in the Ethereum active deposits over the last few months:
Looks like the value of the metric has shot up over the last couple of days | Source: Santiment on Twitter
As displayed in the above graph, the Ethereum active deposits have spiked during the past few days. This suggests that a large amount of users have started making deposit transactions to the exchanges recently.
Before this spike, the metric had been in a decline and had hit relatively low values, implying that the appetite for using exchanges had been shrinking back then. This surge in the active addresses thus signals a change in the market mentality.
At the peak of this spike, the indicator assumed a value of 9,193, meaning that there were 9,193 unique deposit addresses on exchanges. This level is the highest the metric has been since the September 2022 “Merge,” which transitioned the network towards a Proof-of-Stake (PoS) consensus system.
The current values of the active addresses are also comparable to those observed during the FTX crash back in November 2022. Both these events saw the price becoming quite volatile, so the indicator having such high values right now may also mean that Ethereum could face similar bearish volatility in the near future.
ETH Price
At the time of writing, Ethereum is trading around $1,900, down 1% in the last week.
ETH has stagnated recently | Source: ETHUSD on TradingView