Data analysis: Four reasons why Ethereum finally broke new highs, but the benefits have not been exhausted (www.blockcast.cc)
Just entering 2021, ETH has shown an amazing upward trend. The opening price of ETH on January 1st was 736.42u, and on the 19th, at 8 pm Beijing time, it reached a record high of 1438u. The year-to-date increase has exceeded 90%, while BTC has increased by 28% during the same period. (For historical highs, there are differences between different platforms. Coingecko shows the historical high is 1448u, and Huobi shows the highest is 1422u)
As BTC breaks through the previous high and starts a bull market, ETH, which is second only to BTC, will naturally not be dropped by the market. Breaking through the highest point in 2018 is actually something that can already be expected, so the community has not shown special enthusiasm. Even many investors believe that ETH will start to accelerate its skyrocket after breaking through the previous high.
At this important historical node, ETH’s related chain data is also undergoing subtle changes. The changes in these data will help us understand and judge the current situation ETH is facing, and provide a basis for future research on its trend. Let’s take a look at the relevant indicators, data and dynamic changes of ETH.
Reason 1: Large households hoard
Santiment, a crypto analysis company, stated on its official Twitter: 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 ETH has increased, and the number of addresses with less than 10k ETH has decreased correspondingly, with 1-100 ETH holders The number of addresses even plummeted on December 19.
It is not difficult to see that big whales are quietly hoarding ETH, while retail investors are gradually being washed out. Retail investors are mostly out of 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 tightening
CryptoQuant CEO Ki Young Ju said that it seems that, like the BTC market, seller liquidity crunch is beginning to impact ETH.
According to CryptoQuant data, in the past few days, the amount of ETH held by exchanges has decreased significantly, and there are 8.17 million ETHs left on the exchange. From May 2020, the number of ETH held on exchanges decreased from a peak of 14.11 million to 8.17 million today, a 42% drop.
The decline in exchange reserves indicates that ETH is flowing out of the exchange. The outflow of ETH may be hoarded in the wallet or may be pledged in the ETH 2.0 deposit contract.
In contrast to the decline in the amount of ETH held by exchanges, the ETH 2.0 mortgage rate has increased. 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 the 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 increase in the price of ETH.
The number of active validators represents the number of 32 ETHs pledged on ETH 2.0 and successfully activated as validator nodes. This indicator can be used to track the progress of ETH 2.0 and reflect the support of large users for the ETH 2.0 project.
According to data from beaconcha.in, the current number of validators is 63,601, and a maximum of 900 new validators join each day. In the past month, the number of active validators has been steadily increasing, indicating that big users are firmly optimistic about the future of ETH 2.0 and are willing to pledge their ETH.
According to the current progress, it is expected to enter the next stage from August to September 2021. With the advancement of ETH 2.0 and the increase in the number of ETH pledges, the ETH circulating in the market will further decrease, which also verifies the view that ETH is facing liquidity tightening.
Reason 3: Investors are passionate about ETH trading
According to glassnode data, ETH’s recent transaction volume has approached the peak value of the currency price in 2018. Different from the sharp increase in trading volume in 2018, the overall ETH trading volume in this round of quotation remained high and fluctuated. This shows that investors’ enthusiasm for ETH investment is not impulsive, and it feels like it is accumulating. High will not be the end of this round of market.
Reason 4: Institutional blessing
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 for related currency pairs. According to CryptoQuant data, the Grayscale Institution has not bought ETH after December 8, and the current Grayscale ETH holdings are 2,934,107.
During the period when Grayscale stopped buying, the price of ETH did not slow down as a result, on the contrary, the increase in strength far exceeded the decline. Part of the reason for this is 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, BTC’s futures trading volume on the CME exchange continued to create history, and at the same time, the price of Bitcoin was breaking through new highs step by step.
If ETH futures are successfully launched, ETH will follow the pace of BTC to board 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 has increased, ETH is facing liquidity tightening, the high level of trading volume is gathering momentum, the continued attention of institutions and the upcoming major benefits are all important help for ETH to break through the previous high.
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