Ethereum posted its largest net outflow from centralized exchanges in about 4 months. The move has raised expectations of a rebound because it could reduce the amount of supply waiting to be sold on exchanges, but outflows from spot exchange-traded funds (ETFs) remain a burden.

On Oct. 24, blockchain media outlet CryptoSlate reported that on-chain analytics firm Santiment said about 169,770 ether was withdrawn on a net basis from exchanges over a single day. At an ether price of $2,400, that totals about $407 million.

Santiment also pointed to a case in June when about 223,800 ether was withdrawn on a net basis from exchanges. At that time, ether formed a short-term low and then rebounded quickly. A decline in exchange-held balances can be interpreted as a favorable signal for price because it reduces the amount that can be sold immediately.

Even so, exchange withdrawals alone make it difficult to conclude there is accumulation or that a price bottom is in place. Withdrawn ether can be moved to private wallets, staking or institutional custody services, and the data alone cannot confirm the owner or the purpose of the transfer.

In contrast, spot ether ETFs continued to see funds leave. Farside Investors said cumulative net outflows from Oct. 1 to 22 exceeded $1 billion. Net outflows occurred on 14 of the 16 trading days in that period.

Days with net inflows were Oct. 13 and 21, when $24.8 million and $14.9 million came in, respectively. But $110.6 million flowed out again on Oct. 22. On Oct. 23, preliminary figures, with some fund numbers not yet tallied, showed net inflows of $4.4 million.

Exchange withdrawals and ETF outflows measure different flows. Exchange withdrawals track the amount of ether that moved out of monitored addresses, while ETF flows show the investment money coming into and leaving funds. It is therefore difficult to interpret the dollar-converted amount of ether leaving exchanges and ETF net outflows as directly offsetting each other.

Santiment presented $2,400 as a reference price that could determine the short-term direction. If ether recovers to $2,500 and holds, it would add weight to the possibility that a bottom is forming, but that interpretation could weaken if it falls below $2,330.

Ultimately, for reduced supply on exchanges to lead to an actual rebound, demand must also recover. Key variables for judging future price action are whether net exchange outflows persist and whether spot ETF flows return to stable net inflows.