Ethereum has managed to captivate the interest of the community. Especially over the past few months, the largest altcoin has been gathering momentum as it surged to levels not seen since September 2018. At the time of writing, ETH was valued below its resistance level of $400, despite this, the holders of the coin appeared to be optimistic.
ETH price could head skyward
This was evidenced by the consistent falling of Ethereum balances on centralized exchanges over the past few weeks. According to the crypto data provider, Glassnode, the figures for ETH balances on exchanges have dropped to the lowest levels in 2020.
Since the beginning of the month, balances on exchanges took a sharp plunge from a little over 18,750K to approximately 16,750K, at the time of writing. This essentially implied that the Ether holders were now transferring their funds to cold storages or wallets rather than holding it on exchange wallets for the purpose of trading.
As holding sentiment rises, this could necessarily cause the volume on the market to drop, precipitating a rise in the value of the crypto-asset due to scarcity.
DeFi carnage heats up
During the same time, ETH supply in smart contracts, on the contrary, has skyrocketed. This meant that the Ether users preferred to leverage the token gains by profiting from DeFi, rather than trading.
As DeFi boom intensified, several metrics on the Ethereum network climbed to elevated levels. For instance, Ethereum fees continued to hover around its ATH driven by the rising activity of decentralized finance The blockchain’s hash rate has also increased to levels unseen since 2018. This was indicative of a heightened market activity prompted by high supply and demand.
Additionally, the figures for ETH locked in defi surged to a fresh ATH of 7.9 million. This could point towards a potential bullish price action for the coin as more ETH gets locked in DeFi platforms, there will be a decline in its supply, which in turn, could drive up demand and hence, its value.