Yerevan (CoinChapter.com) – Ethereum (ETH) is on a raging rally, trading at an all-time high of $4,259 during the London session Wednesday while subsequently showcasing a proactive imbalance between its supply and demand.
Ki-Young Ju, the chief executive of blockchain analytics firm CryptoQuant, offered a perspective on the sell-side liquidity crisis phenomenon. He stated that the total ETH reserves are declining across both derivative and spot exchange wallets.
Unlike Bitcoin, $ETH holdings have been decreasing in both derivative/spot exchanges, intensifying the sell-side liquidity crunch.
Ethereum ecosystem and its usability are making $ETH leave centralized exchanges.
Bitcoin has lately consolidated lower upon establishing its all-time high, offering traders little upside incentives. That has prompted them to transfer their profits to the altcoin market, especially Ethereum, the second-largest cryptocurrency with a market cap of almost half a trillion dollars.
The CrytoQuant data shows a resilience among traders to realize their Ethereum profits. Instead, they have withdrawn their ETH tokens to their private wallets to have put them to use in yield-returning ventures. That somewhat shows their long-term bullish bias for the cryptocurrency.
Thus, by taking their Ethereum out of exchange wallets, they have unintentionally created a supply shortage against rising demand. Such an imbalance creates a liquidity crisis among exchanges. Meanwhile, the said scarcity tends to drive the ETH/USD exchange rates even higher.
Reasons behind the Ethereum rally
Mr. Ju emphasized institutional investments among the main reasons that fueled the bullish rally, as evidenced by the growing demand for ETH on Coinbase.
The latest major institutional involvement in the Ethereum sector came from the European Investment Bank on April 28. The “lending arm of the EU” issued €100M ($121M) digital notes atop the Ethereum blockchain, validating its ledger’s massive potential in the mainstream financial sector.
Ethereum blockchain is also undergoing changes. It is switching from proof-of-work algorithm to proof-of-stake, which promises to transform the platform altogether.
The demand for Ethereum can be driven partially by the London hard fork – which introduces EIP-1159 – that will overhaul the fee market entirely to make it easier for users to pay fair transaction costs. The network will burn gas fees.
Mr. Ju showed certainty that the declining holdings in both derivative and spot exchange wallets are indicative of the continuous bullish bias. And though Bitcoin’s bullish trend is still ongoing, in his opinion, Ethereum is currently a more attractive option for traders. As of the moment of writing, the ETH price is at $4,259.
Lilit is a Yerevan-based Markets writer, skilled in 3 languages, and interested in writing about the tech world, trading, art, and science. She also has a background in psychology and marketing, which helps deliver the right message to the target audience.
3AC acquired Ethereum (ETH) when it was trading near $2800. ETH rallies by 16%, outperforms BTC. LAGOS (CoinChapter.com) —...
Our Partners
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
Cookie
Duration
Description
cookielawinfo-checbox-analytics
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional
11 months
The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy
11 months
The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.