Ethereum [ETH] has so far failed to reclaim its glory days of February this year. $1800 has acted as a significant point of resistance for the crypto-asset in its hike towards the recently established ATH.
At the time of writing, the altcoin was trading at $1,787 after reversing its gains in the weekend pullback. Despite this, the long-term outlook remained bullish.
Ethereum’s Supply Crunch
This was noted by the crypto-analytic platform Santiment whose tweet on the same read,
“Ethereum’s ratio of token supply on exchanges (20.1%) is now sitting at a 28-month low. We generally look for relative drops in exchange supply compared to previous months as an indication of safety from major isolated selloffs for crypto assets.”
Ethereum might not be witnessing a strong momentum at the current level, but industry experts believe that it is still undervalued and is primed for more gains which could in fact materialize if we consider the above chart. The low supply of ETH on various cryptocurrency exchanges could potentially decrease the overall selling pressure on the asset.
It can be speculated that the demand for the asset has noted a significant uptick in tandem with the astonishing growth of the decentralized finance [DeFi] market. Hence, if this trend could catapult Ethereum to higher highs.
Along the same line, the platform asserted,
“..We certainly agree that #DeFi now has a major impact on this metric’s fluctuation, and will continue to do so as the new normal.”
Moreover, the total value in the ETH 2.0 Deposit Contract just reached an ATH of a whopping 3,556,290 ETH. This was indicative of the rising liquidity as well as volatility in the price of the crypto-asset. The fluctuation has been well noted in the chart and this could essentially be an encouraging signal for it.
Historically, whenever Bitcoin has deviated and traded sideways, it was Ethereum that took the charge and outperformed thus paving the way for other large market cap cryptocurrencies to go on a rally. Its reserves on exchanges hitting a 28-month low, the ETH 2.0 deposit contract accelerating as well as the steady uptrend with respect to the number of active traders on the network, are all positive signs for the crypto-asset.
Therefore, both investors and on-chain analysts await ETH to regain the lost momentum.