Data analysis: Four reasons why Ethereum finally broke new highs, and the benefits have not yet been exhausted
Just entering 2021, ETH has shown an astonishing upward trend. On January 1st, the opening price of ETH was 736.42u. On the 19th, at 8 pm Beijing time, it reached a record high of 1438u. The year-to-date increase exceeded 90%, while BTC increased by 28% during the same period. (For the new historical high, there are differences between different platforms. Coingecko shows that the historical high is 1448u, and Huobi shows that the highest is 1422u)
As BTC breaks through the previous high to start a bull market, ETH, which exists second only to BTC, will naturally not be left behind by the market. Breaking through the 2018 high point is actually already predictable, so the community has not shown special enthusiasm. Many investors even believe that after ETH breaks through the previous high, it will start to accelerate and skyrocket.
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Santiment, an encryption analysis company, stated on its official Twitter that in the past two weeks, the number of whale addresses holding at least 10,000 ETH has increased from 1,171 to 1,220 now, an increase of 4.2%.
According to glassnode data, in the past period of time, the total number of ETH addresses has continued to increase, the number of addresses with more than 10k ETHs has increased, while the number of addresses with less than 10k ETHs has decreased accordingly, and the number of addresses with 1-100 ETHs has increased. The number of addresses even plummeted on December 19th.
It is not difficult to see that the big whales are quietly hoarding ETH, while the retail investors are gradually being washed out. The exit of retail investors is mostly due to speculation, while the hoarding of large investors indicates that more giant whales are optimistic about the future development of ETH.
Reason 2: ETH2.0 pledge leads to liquidity crunch
The decline in exchange reserves indicates that ETH is flowing out of the exchange, and the outflowing ETH may be stored in wallets or may be pledged in the ETH 2.0 deposit contract.
According to CryptoQuant data, in the past few days, the number of ETH held by the exchange has decreased significantly, and there are currently 8.17 million ETH left on the exchange. From May 2020, the number of ETH held by exchanges has decreased from a peak of 14.11 million to 8.17 million today, a drop of 42%.
The decline in exchange reserves indicates that ETH is flowing out of the exchange, and the outflowing ETH may be stored in wallets or may be pledged in the ETH 2.0 deposit contract.
In contrast to the decline in the number of ETH held by exchanges, there is an increase in the ETH 2.0 mortgage rate. The current ETH 2.0 mortgage rate is 2.22%, which means that 2.22% of the ETH supply is pledged in the ETH 2.0 deposit contract. The decline in exchange reserves and the increase in the pledge rate will tighten the liquidity of ETH, and the lack of liquidity will become the driving force for the long-term rise of ETH prices.
The number of active verifiers represents the number of 32 ETH pledged on ETH 2.0 and successfully activated as verifier nodes. This indicator can be used to track the progress of ETH 2.0 and reflect the support of large investors for the ETH 2.0 project.
According to beaconcha.in data, the current number of verifiers is 63,601, with up to 900 new verifiers joining every day. In the past month, the number of active validators has been steadily increasing, indicating that large investors are firmly optimistic about the future of ETH 2.0 and are willing to pledge their ETH.
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Reason 3: Investors are enthusiastic about ETH trading
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Reason 4: Institutional support
The Grayscale Cryptocurrency Trust Fund announced at the end of December that it would suspend accepting new investments. Some investors believe that the slowdown in Grayscale’s entry into the market will increase the possibility of price corrections in related currency pairs. According to CryptoQuant data, Grayscale institutions have not bought ETH since December 8, and the current Grayscale ETH holdings are 2,934,107 pieces.
During the period when Grayscale stopped buying, the price of ETH did not slow down due to this, on the contrary, the strength of the rise far exceeded the decline. This is partly due to the fact that in addition to Grayscale, there are still many institutions in the market that are paying attention to investment opportunities in mainstream cryptocurrencies led by BTC and ETH.
According to related news, the Chicago Mercantile Exchange (CME) will launch ETH futures on February 8, 2021, and is currently in the final review stage. In the past year, the volume of BTC futures trading on the CME Exchange has continued to create history, and at the same time, the price of Bitcoin has also broken through new highs step by step.
If the ETH futures are successfully launched, ETH will follow the pace of BTC on the CME, new investors will bring new funds into the market, and the trading volume of ETH will continue to increase. The entry of traditional investors will push the price of ETH up new heights.
The number of large retail investors out of the market has increased, ETH is facing liquidity crunch, the high trading volume is poised to fluctuate, the continuous attention of institutions and the upcoming major benefits are all important boosts for ETH to break through the previous high. (Author: K Editor: Wu said the blockchain image is from coincodex)
