• The correlation between DEX volumes and ETH prices shows the potential utility of DEX volumes as an additional indicator for traders.
• In March, when the SEC imposed sanctions on centralized exchanges, the volume of trade on DEXes reached its peak accompanied by a surge in ETH’s price.
• Traders are still positive towards ETH with a declining put-to-call ratio for Ethereum indicating a shift in market sentiment towards a more bullish outlook.
The Ethereum[ETH] market has exhibited considerable volatility in recent months, leaving traders grappling with the task of accurately assessing its price trajectory. This challenge was further compounded by the ongoing developments and new upgrades underway within the Ethereum network.
Turn up the volume
Recent data provided by CryptoQuant sheds light on an interesting observation: the volumes traded on decentralized exchanges (DEX) for Ethereum show a notable correlation with the price movements of the cryptocurrency. This correlation highlights the potential utility of DEX volumes as an additional indicator for traders, providing valuable insights to help gauge the future direction of Ethereum’s price.
When the SEC imposed sanctions on centralized exchanges, there was a peak in trade volume on DEXes which corresponded to a surge in ETH’s price. However, after that, there was a consistent fall in DEX volumes that could be considered as a bearish signal. It is important to mention that while there is correlation between DEX volume and ETH prices it does not necessarily imply direct causation – other factors will influence ETH’s future price trajectory as well.
Positive Market Sentiment
Traders are still positive towards ETH despite these factors as evidenced by a declining put-to-call ratio for Ethereum which indicates more bullish bets against ETH than bearish ones being taken out. Put-to-call ratio is metric used to assess option trading activity by comparing number of put options (bearish bets) to call options (bullish bets).
The data from CryptoQuant shows us how there might be potential utility for using Dex volumes as an additional indicator when trying to predict/assess Etheruem’s price trajectory – but other factors should also be kept in mind such as market sentiment indicated by put-to-call ratios and other external developments that may impact prices too such as SEC sanctions or regulations etc..