Ethereum (ETH) looks poised to blast towards $4K; three reasons why

Key Ethereum takeaways:

• Ethereum has been consolidating around $3,200.
• Technical indicators are hinting an extended upside move towards $4,000.
• The outflow from exchanges signifies an uptrend.
• The growing number of ETH in deposit contracts also backs the bullish outlook.

Yerevan (CoinChapter.com) – Ethereum (ETH), the second-largest cryptocurrency by market cap ($376 billion), could be on its way back to $4,000. The ETH/USD pair traded at $3,159 in the European session Monday but flashed signs of an upcoming rally based on technical and on-chain indicators.

#1 Weak speculators in rearview

CryptoWolf, a crypto analyst with a vast Twitter following, posted his view on Ethereum’s future price action, based on their previous setups in late June. Back then, the analyst established the capitulation level based on the high trading volumes on particular days.

They also pointed out that the significant support bar in June is far behind, and the trading volume is way down, which signifies that “we got rid of short-term speculators.” During the past two weeks, Ethereum has been battling against the resistance area near $3,368.

Related: Ethereum reclaims $3.35K as ETH supply squeeze continues

CryptoWolf thinks that the digital asset will break out above the resistance in the upcoming sessions and reach $4,000 before retesting the noted line as support.

#2 Outflow from exchanges

Atop technical indicators, other factors are signaling a bullish bias. According to blockchain analytics platform Glassnode, more and more ETH tokens have been flowing out of crypto exchanges. In addition, the higher withdrawal rate shows that traders are not ready to swap their Ethereum for other crypto or fiat currencies. Instead, they choose to HODL it, anticipating more gains.

When enough traders adopt a holding incentive, the price rises regardless of whether the anticipation had merit in the first place or not. As more accounts hold rather than trade, the liquidity in exchanges shifts. As a result, the supply/demand balance skews, and the value grows in the context of a supply squeeze.

📉 #Ethereum $ETH Number of Addresses Sending to Exchanges (7d MA) just reached a 8-month low of 586.524

View metric:https://t.co/51XMZ0em2z pic.twitter.com/byFagWkDO7

— glassnode alerts (@glassnodealerts) August 30, 2021

Glassnode also pointed out that the number of addresses that send ETH tokens to exchanges is at an 8-month low. Furthermore, as the price rose to $3,300, wallets fell under 600 on the hourly chart.

Also read: 3 incredible reasons why Ethereum is poised to hit $5K in 2021

#3 Growing value locked in Ethereum 2.0 deposit contracts

The Ethereum ecosystem underwent a crucial blockchain upgrade to Ethereum 2.0, dubbed the London hard fork, back in early August. One of the main upgrades in the fork was the shift from proof-of-work to proof-of-stake consensus mechanism. The latter requires validators, who can verify each transaction and earn rewards.

To become a validator within Ethereum 2.0 protocol, the candidates have to stake at least 32 ETH. The validators store their coins in a designated smart contract. According to Glassnode, the amount of Ethereum locked in those contracts has grown drastically, thereby putting a good portion of ETH out of active supply.

📈 #Ethereum $ETH Total Value in the ETH 2.0 Deposit Contract just reached an ATH of 7,259,042 ETH

View metric:https://t.co/SzbMPqvhlb pic.twitter.com/fwcH0VVnIU

— glassnode alerts (@glassnodealerts) August 30, 2021

The all-time high number of ETH tokens in deposit contracts (7.2 million coins) also signifies the traders’ confidence in the platform and their readiness to stake their coins to win rewards.

All three factors together make a rather strong case for a bullish continuation. In addition, the technicals point at a possible uptrend in the upcoming sessions, and the Glassnode data points to the traders’ disposition to hold Ethereum rather than trade it, which generally leads to a price increase.

Also read: Solana hits new record high at $103