Crypto analysis firm Santiment is warning traders that leading smart contract platform Ethereum (ETH) is flashing red flag signals on-chain.
In a new Santiment Insights report, the crypto intelligence company says that while Ethereum is grinding higher, its trading volume has been on a downtrend since September.
“We are seeing a strong divergence between price and trading volume. Price heading up, trading volume trying to pick up but fails and heading down.”
Santiment adds that on-chain volume or the number of active addresses has also dropped over 17% from 675,500 on October 30th to 555,020 at time of writing.
Meanwhile, social volume for the second-largest cryptocurrency is rising, suggesting that market participants are overly optimistic about ETH’s rally.
Another metric on Santiment’s radar is network profit/loss (NPL), which measures the overall daily return on investment across all network transactions. According to Santiment, a massive dip in NPL suggests that ETH holders, on average, are selling at a loss.
Santiment says that these on-chain signals are “worrying” and that the firm is “generally bearish” on the smart contract platform.
“A bunch of long-lasting divergences is pointing us to the idea that we need to go down… We see network activity going down even though the price is pushing up. People [are] too relaxed to take profits even though ETH is going up (visible in NPL). There is a good chance they will be punished.”
You can read the full report here.
