DEX volume fell to $1.03 billion, but indicators showed that the price of ETH could rise. Settlement levels suggested that the altcoin could leave more shorts in the settlements.
Activity on Ethereum [ETH] decentralized exchanges has been decreasing for the past seven days, AMBCrypto confirmed. On May 28, according to Messari data, the volume was $3.34 billion.
However, data at the time of this issue presented that DEX volume fell to $1.03 billion: a decrease of $2.21 billion. An increase in DEX volume would have meant more liquidity for Ethereum.
As the volume decreased, this means the number of blockchain transactions involving ETH was not as high as last week. Another interpretation points to a decrease in demand for altcoins.
A “Slight” Drop is not the End
With demand dwindling, it may be difficult for ETH to experience a major price increase. At the time of writing, ETH was trading at $3,763, down 3.50% over the past week.
The disappointing price action is one reason why some participants share the view that Ethereum may not be a major part of the bull market.
However, AMBCrypto found that this opinion was not objective. This was due to the signals shown by the Market Value to Realized Value (MVRV) Z-score. The MVRV has a strong correlation with the price.
Therefore, it shows when a cryptocurrency is bearish or bullish. When the value is negative, it means that the asset is in a bearish phase. The last time ETH was in such a state was in October 2023, which means that the token was in a bullish phase.
The MVRV z-score was 1.63. Looking at the peaks of previous bull cycles, such as 2017 and 2021, the metrics were correct. 14.19 and 4.76, respectively. If the pattern repeats, it would mean that Ethereum’s price could go higher.
However, this is only for the long term. In the short term, AMBCrypto analyzed settlement levels. The settlement level is the price at which an exchange forcibly closes a trader’s position.
Watch out for the Bears! ETH Seems Ready to Recover
The reason for this is to avoid further losses. At the moment, Ethereum’s major settlements could take place between $3,882 and $3,946. This implies that the price may move towards the aforementioned region.
In addition, the Cumulative Liquidation Level Delta (CLLD) was examined. A positive value of this reading implies that there are longer-term liquidations. A negative value indicates that short-term liquidations dominated.
According to available chart information, the CLLD was negative and short liquidation in the last seven days exceeded $59 million.
However, from a price perspective, the negative CLLD is bullish for ETH as late shorts may miss the dip. In this case, ETH could rally and the $3,946 projection could become a reality.
ETH ETF Demand Factor
Most market observers noted a massive demand for ETH from spot ETH ETFs. However, there were mixed opinions on the matter, especially after spot ETH ETFs removed the option to bet.
One user mentioned that there was an “opportunity cost” to choosing a spot ETH ETF without betting.
However, a weakening DXY could drive short-term ETH price action ahead of the launch of spot ETH ETFs. Nevertheless, it remains to be seen how demand for ETH ETFs will develop.
By Leonardo Perez
