Investment

The bullish case for Ethereum reinforces how the exchange ETH outflow overcomes bitcoins


Ether (ETH) stock market reserves continue to decline, albeit at historic lows. This trend indicates a shortage of ETH supplies across major trading platforms following the issuance of the Ethereum 2.0 deposit wallet for betting.

As Cointelegraph stated earlier, bets were approaching $ 4 billion in January, resulting in approximately 2% of ETH deliveries being entered into in the Eth2 deposit agreement.

The low supply of ETH on stock exchanges should reduce the overall selling pressure on the asset, especially if the demand for ETH increases with the rapid growth of the decentralized financial market.

ETH all exchange reserves vs. BTC. Source: CryptoQuant

Why doesn’t ETH see a strong rising moment?

In relation to the amount of ETH circulating in the foreign exchange market, the price of ETH did not record the strong growth dynamics that it recorded at the beginning of February.

Analysts on the on-chain platform for data analysis CryptoQuant he said:

“The ETH $ reserve on all centralized exchanges is declining, while the $ BTC reserve has been repeating up and down since January this year.”

There are two main reasons why ETH has been consolidating in the last two weeks. First the spike in 10-year US Treasury proceeds caused a decline in overall risk in the market. Second, bitcoin (BTC) was overcame ETH and suppressed Ether momentum.

However, in the foreseeable future, traders and analysts in the chain expect ETH to regain momentum.

1-day ETH chart with key levels. Source: TradingView.com, Cactus

A pseudonymous trader known as “Cactus” said that based on its technical market structure, ETH is ready to see a new all-time high if it holds $ 1,750. He he wrote:

“As long as we continue to absorb sales here and the daily deadlines are above $ 1,750, we expect new ATHs soon.”

In addition, the latest drop in the price of BTC has not seen a significant drop in ETH, while the ETH / BTC pair has in fact seen a surprising rebound, meaning that the bull cycle remains intact.

“Another big impulse wave could occur once this period of consolidation and compression is completed. This next impulse wave is expected to power Ether well above $ 2,000, ”said Cointelegraph Markets analyst Michaël van de Poppe he explained in his latest analysis.

At the peak of declining foreign exchange reserves and a favorable structure of the technical market, CEO CryptoQuant Ki Young Ju noted that the ETH recorded its second largest hourly outflow in 2021 on 16 March.

Exchange outflows are usually a sign of positive market sentiment, as this probably means that an institution or investor with a high net worth accumulates ETH and sends it to a self-service wallet. Ju he said:

“We just had our second hourly ETH $ outflow in hourly data this year. The liquidity crisis on the sales side of centralized stock exchanges seems to be deepening. That’s bull. “

The declining foreign exchange reserves alone may not be enough to plot the upward short-term trajectory for ETH due to Ethereum 2.0.

In the first few weeks of its launch, Lido, the stakeout platform, saw more than 60,000 ETH bet on Ethereum 2.0.

As a result of the Lido deposit and deposits to the address of the Eth2 contract, there was a massive decline in foreign exchange reserves at ETH. Without large catalysts, however, bitcoins also declined significantly in their foreign exchange reserves over the same period.

Therefore, it is essential that other important on-chain data points, such as increased transaction volumes and short-term exchange outflow fluctuations, complement the general decline in foreign exchange reserves to reinforce the argument for a broader short-term rally.

Treasury revenues and stock market momentum are key

In the foreseeable future, cryptocurrencies are likely to be somewhat correlated with US Treasury yields and the stock market.

Over the past month, the crypt market has recorded a high inverse correlation with the 10-year Treasury yield.

BTC / USD 10-year treasury yield (orange). Source: TradingView

As the Treasury Department’s yield approached 1.6% at the end of February, the price of bitcoins has dropped back to its recent lows of $ 43,000, bringing with it Ether and other top altcoins.

As long as the treasury yield remains stable, p incentive controls are being introduced in the United States, the outlook for Ethereum should remain optimistic throughout March.



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