Ethereum Exchange Outflows Touch Multi-Month Highs, Rally Above $4000 Within Reach

Over the past few days, Ethereum’s (ETH) price has oscillated within a narrow trading range. This mirrors the broader cryptocurrency market trend

After a slight dip below $3,800 on December 13, Ethereum’s (ETH) price has recovered and now trades at $3,866. This comes amid a broader cryptocurrency market consolidation, with most coins showing minimal price changes over the past 24 hours.

However, ETH has seen a significant outflow from cryptocurrency exchanges, which could indicate a potential rally towards the $4,000 mark. Here's a closer look at what this outflow might mean for ETH's price in the short term.

As cryptocurrency prices continue to oscillate within a narrow range, investors are keeping a close eye on the market dynamics to gauge the next directional move. On December 14, a substantial outflow of ETH from cryptocurrency exchanges has sparked hopes for a potential rally towards the $4,000 mark.

According to data from on-chain analytics firm Glassnode, 108,521 ETH were withdrawn from exchanges on December 13. At current market prices, this outflow is valued at over $418 million.

As per Glassnode's analysis, this marks the highest single-day outflow of ETH from exchanges since March 13, highlighting a strong shift in investor sentiment towards the bullish side.

This large-scale outflow from exchanges is generally considered bullish for an asset's price. When investors withdraw their holdings from exchanges, it often indicates their intention to hold onto their assets rather than selling them.

Reduced selling pressure in the market can contribute to a scenario where prices are more likely to rise. In the case of ETH, if buying activity resurges, it could potentially lead to a breakout from its narrow trading pattern.

Further bolstering this bullish outlook, ETH's Relative Strength Index (RSI) on the daily chart currently stands at 60.22, indicating a sustained demand for the leading altcoin.

The RSI is a technical indicator that measures an asset's price momentum on a scale of 0 to 100, with higher values indicating overbought conditions and lower values suggesting an oversold market.

Typically, values above 70 indicate an overbought asset that may be due for a price decline, whereas values below 30 can signal an oversold asset that might experience a price recovery.

At 60.22, ETH's RSI indicates that the altcoin is still in a moderately bullish zone, with prices not yet reaching overbought territory. This suggests there is still some leeway for further price appreciation before approaching overbought conditions.

Currently, ETH trades at $3,866, facing immediate resistance at $4,069. If selling pressure eases up further, ETH's price could potentially break above this resistance and attempt to rally towards its all-time high of $4,936, last reached in November 2021.

However, a rise in selling activity or a shift in investor sentiment towards profit-taking would invalidate this bullish projection.

If ETH holders decide to sell their holdings en masse, its price may drop to $3,388, indicating a potential pivot point for further price movements.