Ethereum (ETH) is on the verge of losing its important support at US$1,850. On-chain data shows that the ETH 2.0 validator is re-staking its new withdrawal from the decentralized finance (DeFi) protocol. Thus, they hope to get higher yields. Will the action trigger a recovery in ETH prices in the next few days? Let's look at the following explanation.
Ethereum has failed to consolidate its price gains from the positive sentiment of the Shapella upgrade. However, the strong fundamentals on-chain suggest that investors are still confident about the prospects of the Ethereum network in the long term.
Huge Amounts of ETH Start Leaving the Exchange
Shortly after the Shapella upgrade was completed, there was an increase in the volume of ETH volumes being transferred to the exchange's known wallets. The action is a move by ETH 2.0 stakers and other investors who are strategically placing their coins on exchanges for potential sell-offs and short-term take profit opportunities.
However, over the past few weeks, investors have started moving their coins off exchanges. These conditions suggest that the sell-off may have ended.
After a sharp increase due to Shapella's upgrade, data from Glassnode shows that ETH balances deposited to the exchange have been steadily decreasing since April 18th. Between April 18 and April 24, the ETH balance on the exchange decreased by 262,000 coins. At the current market price, this means that there are US$484 million worth of ETH coins that have moved from exchanges over the past 5 days.
The recent decline has resulted in the amount of ETH held on crypto exchanges printing its lowest level since March 2021. This reduction could be considered a bullish signal, for several reasons.
First, when the supply of ETH on an exchange decreases, it means that there are only a small number of coins available to buy on the open market. Conditions like this can cause the price of ETH to climb, as potential buyers must compete for a smaller pool of coins.
Then, the second reason is that large investors often move their ETH from exchanges as a strategy for long-term holding. This situation indicates confidence in the fundamental value of the Ethereum network. If the trend continues this week, a bullish accumulation wave could spread throughout the Ethereum ecosystem.
The Migration from Exchange to DeFi Smart Contracts
Besides the decline in ETH balances on the exchange, there are other on-chain metrics that also confirm this bullish reading. The metric is the number of coins locked in a DeFi smart contract.
This graphic from Glassnode illustrates how the supply of ETH in smart contracts has increased significantly. However, this condition appears after the Shapella upgrade is complete.
Between April 11 and April 13, around 462,000 ETH has been withdrawn from DeFi smart contracts. Then, more than 600,000 ETH (roughly 0.504% of the total circulating supply) has been deposited back into the DeFi protocol hosted on Ethereum since then.
Depositing back 600.00 ETH into the DeFi protocol shows that investors are willing to provide liquidity to the Ethereum ecosystem.
In addition, the data also shows that bearish investors who panicked before the Shapella upgrade began to regain their confidence. Instead of selling, they actually reallocated their ETH to the DeFi protocol to achieve a higher yield.
In general, the inflow of funds can drive the growth of DeFi applications and yield-generating platforms. That can create a bullish cycle of increased liquidity and adoption, eventually leading to greater network value and an appreciating ETH price.
In general, the inflow of funds can drive the growth of DeFi applications and yield-generating platforms. That can create a bullish cycle of increased liquidity and adoption, eventually leading to greater network value and an appreciating ETH price.
If the price of Ethereum can break above US$1,950, it could lead to a further rally to US$2,450. However, around that zone, the potential sell-off of the 8.4 million addresses holding 27.8 million ETH is likely to be a formidable barrier.
Keep in mind, the bears could invalidate this bullish reading, if Ethereum fails to maintain its position above US$1,850. However, the support of 2.09 million addresses holding 3.11 million ETH prevented the decline. However, in case of failure, Ethereum holders need to prepare for a sharp price drop to the next significant support level at US$1,450.
Ethereum (ETH) is on the verge of losing its important support at US$1,850. On-chain data shows that the ETH 2.0 validator is re-staking its new withdrawal from the decentralized finance (DeFi) protocol. Thus, they hope to get higher yields. Will the action trigger a recovery in ETH prices in the next few days? Let's look at the following explanation.
Ethereum has failed to consolidate its price gains from the positive sentiment of the Shapella upgrade. However, the strong fundamentals on-chain suggest that investors are still confident about the prospects of the Ethereum network in the long term.
Huge Amounts of ETH Start Leaving the Exchange
Shortly after the Shapella upgrade was completed, there was an increase in the volume of ETH volumes being transferred to the exchange's known wallets. The action is a move by ETH 2.0 stakers and other investors who are strategically placing their coins on exchanges for potential sell-offs and short-term take profit opportunities.
However, over the past few weeks, investors have started moving their coins off exchanges. These conditions suggest that the sell-off may have ended.
After a sharp increase due to Shapella's upgrade, data from Glassnode shows that ETH balances deposited to the exchange have been steadily decreasing since April 18th. Between April 18 and April 24, the ETH balance on the exchange decreased by 262,000 coins. At the current market price, this means that there are US$484 million worth of ETH coins that have moved from exchanges over the past 5 days.
The recent decline has resulted in the amount of ETH held on crypto exchanges printing its lowest level since March 2021. This reduction could be considered a bullish signal, for several reasons.
First, when the supply of ETH on an exchange decreases, it means that there are only a small number of coins available to buy on the open market. Conditions like this can cause the price of ETH to climb, as potential buyers must compete for a smaller pool of coins.
Then, the second reason is that large investors often move their ETH from exchanges as a strategy for long-term holding. This situation indicates confidence in the fundamental value of the Ethereum network. If the trend continues this week, a bullish accumulation wave could spread throughout the Ethereum ecosystem.
The Migration from Exchange to DeFi Smart Contracts
Besides the decline in ETH balances on the exchange, there are other on-chain metrics that also confirm this bullish reading. The metric is the number of coins locked in a DeFi smart contract.
This graphic from Glassnode illustrates how the supply of ETH in smart contracts has increased significantly. However, this condition appears after the Shapella upgrade is complete.
Between April 11 and April 13, around 462,000 ETH has been withdrawn from DeFi smart contracts. Then, more than 600,000 ETH (roughly 0.504% of the total circulating supply) has been deposited back into the DeFi protocol hosted on Ethereum since then.
Depositing back 600.00 ETH into the DeFi protocol shows that investors are willing to provide liquidity to the Ethereum ecosystem.
In addition, the data also shows that bearish investors who panicked before the Shapella upgrade began to regain their confidence. Instead of selling, they actually reallocated their ETH to the DeFi protocol to achieve a higher yield.
In general, the inflow of funds can drive the growth of DeFi applications and yield-generating platforms. That can create a bullish cycle of increased liquidity and adoption, eventually leading to greater network value and an appreciating ETH price.
In general, the inflow of funds can drive the growth of DeFi applications and yield-generating platforms. That can create a bullish cycle of increased liquidity and adoption, eventually leading to greater network value and an appreciating ETH price.
If the price of Ethereum can break above US$1,950, it could lead to a further rally to US$2,450. However, around that zone, the potential sell-off of the 8.4 million addresses holding 27.8 million ETH is likely to be a formidable barrier.
Keep in mind, the bears could invalidate this bullish reading, if Ethereum fails to maintain its position above US$1,850. However, the support of 2.09 million addresses holding 3.11 million ETH prevented the decline. However, in case of failure, Ethereum holders need to prepare for a sharp price drop to the next significant support level at US$1,450.