Bullish case for Ethereum strengthens as exchange ETH outflows outpace Bitcoin
Ether (ETH) holdings on the exchanges continue to fall, despite being at historic lows. This trend suggests a shortage of ETH on major exchanges following the release of the Ethereum 2.0 depository wallet for equity offerings.
As Cointelegraph previously reported, the value of the stock reached $4 billion in January 2021, leaving about 2% of ETH’s offering locked up in the Eth 2.0 deposit agreement.
The low supply of ETH on exchanges should reduce the overall selling pressure on the assets, especially if the demand for ETH increases along with the rapid growth of the DeFi market.
ETH all exchange reserves against BTC. Source: CryptoQuant
Why does ETH not have strong upside momentum?
Relative to the amount of ETH circulating in the currency market, the price of ETH has not seen as much bullish momentum as it did in early February.
Analysts from the data analytics platform on the CryptoQuant channel said:
The $ETH reserve on all central exchanges is falling, while the $BTC reserve has been rising and falling since January this year.
There are two main reasons why ETH has consolidated over the past two weeks. First, the sharp rise in 10-year US Treasury yields has led to a decline in overall market risk. Second, Bitcoin is outperforming ETH, which weakens Ether’s momentum.
But in the near future, retailers and chain analysts expect ETH to rebound.
ETH 1-day chart with key levels. Source: TradingView.com, Cactus
A pseudo trader known as Cactus said ETH is heading for a new all-time high based on the technical structure of the market, assuming it is at $1,750. He wrote:
As long as we continue to capture the daily sell-off and prices close above the $1750 zone here, we can expect further upside in the near term.
Moreover, the recent decline in the price of BTC has not led to a significant drop in ETH, while the ETH/BTC pair has even seen a surprising rebound, meaning that the bullish cycle has remained intact.
The next big wave of momentum could come after this period of consolidation and contraction is over. This next wave of momentum is expected to lift Ether well above $2,000, according to Cointelegraph market analyst Michael van de Poppe in his latest analysis.
Against the backdrop of falling FX reserves and a favorable technical market structure, CryptoQuant CEO Ki Yang Zhu noted that ETH was up on the 16th. March had the second-largest hourly production in 2021.
Stock market outflows are usually a sign of positive market sentiment, as it likely means that an institution or wealthy investor is accumulating ETH and sending it to a self-hosted portfolio, Kee said :
We just had the second largest outflow of $ETH this year, based on hourly data. There seems to be a growing liquidity crisis on the central sales exchanges. It’s a cow.
The drop in foreign reserves alone may not be enough to demonstrate a short-term uptrend for ETH due to Ethereum 2.0.
In the first few weeks after the launch of Lido, the flask installation platform, more than 60,000 flask were installed via Ethereum 2.0.
Thanks to the Lido exchange rate and deposits on the Eth 2.0 contract, ETH experienced a huge drop in foreign exchange reserves. However, without major catalysts, bitcoin reserves traded on exchanges also fell significantly over the same period.
In this regard, it is essential that other key data points within the chain, such as. B. Increased trade volumes and short-term spikes in foreign exchange outflows complement the overall downward trend in foreign exchange reserves and strengthen the case for a broader recovery in the near term.
Treasury yields and equity market dynamics are crucial
Cryptocurrencies are likely to show some correlation with US Treasury bond yields and the stock market in the near future.
In the past month, the crypto market showed a strong inverse correlation with 10-year Treasury bond yields.
BTC/USD versus 10-year Treasury yields (orange). Source: View of the shop
When Treasury bond yields hit 1.6% in late February, the price of bitcoin fell back to its recent low of $43,000, taking Ethereum and other leading alternative cryptocurrencies with it.
As long as Treasury yields remain stable and U.S. stimulus measures persist, the outlook for Ethereum should remain bullish through March.
frequently asked questions
Can Ethereum outperform Bitcoin?
Data from the Blockchain Center shows that Ethereum has already surpassed Bitcoin in terms of number of nodes, number of transactions and total transaction value. …
Is it better to trade bitcoin or ether?
Bitcoin transactions are primarily monetary transactions; Ethereum transactions can be executable code. Transactions on the Ethereum network are much faster than on the Bitcoin network. Bitcoin is primarily a store of value and a medium of exchange, while Ethereum is not. Ethereum was founded to complement Bitcoin, but eventually became a competitor.
Ethereum beef ?
Ethereum (ETH/USD) is in a strong uptrend. The bullish momentum is similar or even stronger than bitcoin’s recent push above $50,000. Ethereum (ETH/USD) is in a strong uptrend. The bullish momentum is similar or even stronger than bitcoin’s recent push above $50,000.
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