Ether (ETH) surged to a new high for the year at $3,822 on March 5, following an 8% rally in the past 24 hours. The second-largest cryptocurrency by market capitalization has seen a 15% increase in the last seven days and a 132% rise in the past six months.
Data from Cointelegraph Markets Pro and TradingView indicates that Ether’s price is currently hovering around $3,796, which is about 28% below its all-time high of $4,891 set on November 26, 2021.
Alongside Ether’s rally, there has been a significant increase in daily trading volume, which now stands at $33.29 billion. With a market capitalization of $453 billion, Ether solidifies its position as the second most valuable cryptocurrency, according to CoinMarketCap.
Several fundamental factors and on-chain metrics support the upward trend of Ethereum, in addition to the broader uptrend in the crypto market driven by increased inflows into spot Bitcoin ETFs and the upcoming Bitcoin supply halving.
One of the factors contributing to Ether’s upside is the decreasing supply on exchanges. Data from Glassnode shows that the ETH balance on exchanges has reached a 20-month low of 13.14 million ETH, following a 7.7% drop in the past 90 days.
The total balance of inflows and outflows in known exchange wallets has experienced a steep decline since October 2023, coinciding with a surge in withdrawals from trading platforms. This decrease in ETH balances on exchanges suggests that investors may be withdrawing their tokens into self-custody wallets, indicating their intention to hold and potentially benefit from future price increases.
Furthermore, there has been a noticeable increase in accumulation by large holders in recent weeks. Data from Glassnode reveals that wallets holding $100,000 or more worth of ETH have been on the rise since the beginning of February.
This accumulation trend indicates that whales have not sold their ETH during the latest rally but have continued to accumulate, suggesting their confidence in further price gains.
Another factor contributing to the decreasing supply of ETH available for trade is the growing amount of Ether staked on the Beacon Chain. According to data from Dune Analytics, over $31.58 million ETH, equivalent to $119.8 billion, are currently being staked on Ethereum’s proof-of-stake layer protocol.
This means that 26.3% of the total ETH supply has been staked and is unavailable in the market, with more than 987,000 individual validators participating in the staking process.
The availability of liquid staking solutions like Lido, Rocket Pool, and EtherFi has further facilitated the staking of ETH in smaller amounts and the use of staked assets as collateral in decentralized finance (DeFi).
Ether’s futures open interest has also surged, reaching around $11.98 billion, closing in on the peak of $13 billion recorded on November 9, 2021. This increase in demand for leverage suggests a growing interest in leveraged ETH positions.
Overall, the on-chain and derivatives markets for Ethereum reflect investors’ optimism and expectations for a potential approval of a spot Ether ETF. Additionally, the upcoming Dencun upgrade could also be contributing to the bullish sentiment surrounding ETH price.
It is important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research and exercise caution when making investment decisions.