Ethereum exchange supply squeeze underway as ETH looks oversold

The number of Ether tokens (Ethereum’s native cryptocurrency) on crypto exchanges is depleting. Data shows that Investors are withdrawing ETH from exchanges en-masse and depositing them in their private wallets. And on the technical front, the ETH/USD trading pair has entered oversold territory. Is this an indication of an upcoming rally?

ETH Deposits Depleting From Cryptocurrency Exchanges

After the May 19 “mayhem,” Ethereum’s token Ether (ETH) was quick enough to recover to price levels seen on May 1. On May 24. The cryptocurrency token since then has been trading sideways till date.

However, there’s something that might uplift bullish sentiment around ETH again. It is the depleting supply of Ethereum’s native tokens on crypto exchanges. CryptoQuant highlighted this in a tweet yesterday. According to the on-chain trading insights provider, an ETH exodus lead to a massive outflow of 395,903 coins from Coinbase.

395,903 $ETH flowed out from @coinbase today.

Chart👉 https://t.co/yocDHcz14Z pic.twitter.com/UXxdksAThU
— CryptoQuant.com (@cryptoquant_com) June 9, 2021

And this is just yesterday. Since September last year, ETH exchange balances have been on a declining trend. According to Glassnode, despite the monumental price crash last month, Ether deposits on exchanges hit a 2-year low.

This shows that investors don’t want to sell off their holdings just yet despite the bearish sentiment in ETH markets. Although there may have been some profit-taking during the drawdown, the overall trend remains bullish. In fact, mainstream media outlet Bloomberg pointed out an ETH buying frenzy amid bitcoin’s significant price drop.

Oversold Technical Setup Corroborates Bullish Sentiment

If the daily ETH/USD price chart is anything to go by, Ethereum coin bears are looking stressed. Since the correction to price levels around $1650 on May 23, ETH has been printing higher lows. Bulls have absorbed all selloff attempts. The Ethereum token remains well supported above the crucial 100-day simple moving average line.

Apart from this, the RSI (Relative Strength Indicator) and MACD (Moving Average Convergence Divergence) indicators also point to oversold conditions. Permabulls and whales (read strong hands) bought all the ETH coins that sellers sold during the flash crash.

Post the drawdown and the subsequent correction on May 24, buyers lapped up all available cheap ETH from exchanges and moved them to their wallets, waiting to offload at much higher prices from current spot rates.