- The Ethereum CPI revealed that institutional investors in the US have reduced their exposure to the altcoin
- On the daily chart, daily traders were seen splitting their ETH holdings
Ethereum [ETH] Coinbase Premium Index (CPI) has recently entered negative territory, suggesting that institutional investors in the US have reduced their altcoin accumulation on Coinbase. This is evident from findings shared by CryptoQuant’s pseudonymous analystLargest trader.’
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The CPI is a metric that measures the difference between an asset’s price on Coinbase and its price on Binance. When an asset’s CPI value is positive, it indicates strong buying pressure among institutional investors on Coinbase. Conversely, when the CPI metric returns a negative value, less accumulation activity is happening on Coinbase.
Greatest Trader analyzed ETH’s CPI based on a 30-day moving average and found that “there has been a substantial shift in sentiment in the US market, as evidenced by the noticeable downward trend in the premium index.”
At the time of writing, ETH’s CPI was negative for the first time in the past month with a reading of -0.0027.
Source: CryptoQuant
According to the analyst, this shift in sentiment is notable because “many U.S. investors are high net worth individuals or institutional entities” and are therefore able to influence the asset’s price movements.
Commenting on the impact of the CPI drop on the ETH market, the analyst added:
“This behavior could cast a pessimistic light on ETH’s outlook. It implies that these investors may not be inclined to accumulate ETH within this price range, possibly indicating bearish sentiment in the market.”
Not just America…
An assessment of money flows into digital asset investment products revealed that the year so far has been marked by significant outflows from ETH.
Although the altcoin reached the $2,000 psychological price point in April, it has since gone south, lingering in a narrow range ever since. In a way, this has eroded investor confidence and led to a return of negative sentiment in the market.
As of August 4, the total outflow of ETH has reached $76 million to date.
Read Ethereum’s [ETH] Price Forecast 2023-24
Traders continue to look away
At the time of writing, ETH changed hands at $1,848. Facing strong resistance at $2000, the price of the alt has been hanging in a tight range since April. This is because of the statistically positive correlation with Bitcoin [BTC]whose price has fluctuated between $29,000 and $30,000 since April.
With declining accumulation among daily traders, key momentum indicators were below their neutrals at the time of writing. The Relative Strength Index (RSI) was 47.36, while the Money Flow Index (MFI) came a little closer to the oversold zone at 26.31.
The Chaikin Money Flow (CMF) was negative at the time of writing, which was a sign of increased liquidity output from the ETH market.
Source: ETH/USDT on TradingView