Ethereum Price Prediction: ETH eyes $3,000 as network activity explodes and scarcity grows – FXStreet
Ethereum has finally hit a clear new all-time high across all exchanges, and it’s currently under a healthy consolidation period. Over the past week, Ethereum’s dominance over the market increased from 13% to 17%, while Bitcoin lost close to five percentage points.
The Eth2 deposit contract continues to receive more Ethereum. At the time of writing, it holds around 2.83 million ETH worth over $4 billion at current prices. This is a significant number of Ethereum coins that are locked and cannot be sold.
ETH coins locked
In addition to the 2.83 million ETH locked inside Eth2, there are also 7 million ETH locked across DeFi protocols and projects, which means close to 10 million ETH are currently not truly in circulation, increasing its scarcity significantly, and therefore, bullish pressure.
ETH Transactions chart
One of the main strengths of Ethereum during this run has been a massive increase in the number of transactions in the past several months. The digital asset has reached a 7-day average of 1.15 million transactions, which is almost higher than its peak of transactions in January 2018.
Ethereum exchange Netflow
On January 22, 2021, Ethereum saw a colossal spike in the number of coins withdrawn from exchanges. Around 659,000 ETH left exchanges in just a single hour, which is the largest amount ever and indicates traders and investors are not interested in selling the digital asset currently.
Ethereum supply on exchanges chart
Although this kind of spikes is not common, the total number of ETH inside exchanges has been declining since March 2020, from a high of 27% of Ethereum to only 20.8% currently, a notable decay. This is a key aspect that should allow Ethereum price to continue rising as demand quickly outpaces supply scarcity.
Total Value Locked chart
The DeFi industry has seen a tremendous surge of money in the past few weeks, from $15.4 billion on December 31, 2020, to a current all-time high of $26.5 billion. Considering that around 90% of all DeFi projects are built on Ethereum, this metric shows how fast the ecosystem is growing, and it’s undoubtedly bullish for ETH.
ETH/USD 4-hour chart
However, despite all the positive indicators and on-chain metrics in favor of Ethereum, the TD Sequential indicator has presented a sell signal on the 4-hour chart, which, in the past, has proven to be a reliable call. This could mean that Ethereum price is poised for a short-term pullback before resuming its uptrend.
Cardano on-chain metrics flash capitulation signals, supporting a bullish thesis for ADA price. The Cardano Foundation announced its commitment to push ADA towards complete decentralization.
Binance is currently facing one of the largest investigations that the US Department of Justice has ever conducted into a cryptocurrency firm, according to a Bloomberg report.
XRP funds recorded net institutional inflow of $500,000 in the past week. Ripple whales distributed their XRP token holdings while retail investors accumulated in the last three weeks.
Chainlink ecosystem’s 200 largest wallet addresses scooped up 40.18 million LINK tokens in October. Large wallet investors accumulated LINK at $7.40, the altcoin’s price has nearly doubled in the past month.
After the US Securities and Exchange Commission (SEC) announced a delay in their ETF decision, Bitcoin (BTC) price saw a quick uptick, which did not make sense. Currently, BTC is hovering below the $38,000 level, leaving investors guessing its next move.
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.
Opinions expressed at FXStreet are those of the individual authors and do not necessarily represent the opinion of FXStreet or its management. FXStreet has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and omissions may occur. Any opinions, news, research, analyses, prices or other information contained on this website, by FXStreet, its employees, clients or contributors, is provided as general market commentary and does not constitute investment advice. FXStreet will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.