Ethereum has been in the spotlight once again, with the second-largest cryptocurrency in the world showing signs of recovery after a recent sharp drop. On April 9, ETH surged by 8.24%, followed by another 1.5% increase in the past 24 hours. However, recent on-chain data has raised concerns as there has been a significant and unusual flow of ETH into derivatives exchanges. Could this be a warning sign of another dip in the market?
A Rocky April for Ethereum
At the beginning of April, Ethereum was trading at $1,821.51. The price briefly touched $1,957.94 on April 2 but then dropped back down to $1,794.51 by the end of the day. From April 5 to 8, ETH experienced a decline of over 18.86%. Since April 9, the market has shown signs of recovery with a gain of 7.82%.
The second week of April has been relatively calmer, with Ethereum edging up by 2.83% between April 7 and 13. However, the overall gain over the past seven days has been just 0.1%, indicating that the market remains cautious.
Big Inflows to Derivatives: A Red Flag?
On a recent day, over 77,000 ETH were transferred to derivatives exchanges, marking the largest daily inflow seen in March and April. This move coincided with a 0.71% decrease in ETH’s price, with the cryptocurrency hitting a low of $1,537.28 at one point.
Such large inflows to derivatives exchanges typically indicate that traders are preparing for downside moves by hedging their positions or opening short positions. Similar, albeit smaller, inflows occurred on March 26 and April 3, both preceding steep corrections in the market.
Tariff Tensions and Crypto Volatility
Global issues, such as the U.S. government’s tariff policies under the Trump administration, have also contributed to Ethereum’s price swings. The uncertainty stemming from these policies continues to impact investor sentiment across various asset classes, including cryptocurrencies. While there is currently a 90-day pause on the tariff policy, the uncertainty lingers.
Since April 1, the overall crypto market has seen a slight decline of 0.38%, with the altcoin market down by 4.42%. Ethereum, in particular, has faced a drop of at least 12.56% during the same period.
Ethereum Market Outlook: What Traders Should Watch Next
While Ethereum has demonstrated strong growth in recent years, the start of 2025 has been challenging. The cryptocurrency fell by 45.3% in the first quarter of the year, a stark contrast to the positive performance in Q1 of 2024 and 2023. While Ethereum is currently showing signs of short-term recovery, the large inflows to derivatives exchanges and ongoing global economic tensions suggest that the short-term outlook remains uncertain.
In conclusion, Ethereum investors should remain vigilant, keeping an eye on market charts and global headlines for any potential developments. Stay informed to navigate the ever-changing cryptocurrency landscape effectively.