At a value of $462.18, Ethereum has climbed to levels not seen since July 2018. The incredible build-up was spun by the exploding popularity of decentralized finance [DeFI] as well as by the long-planned upgrade – Ethereum 2.0.
Ethereum’s rally has just begun and the following reasons indicate why the largest altcoin could see more gains in the coming days
Strong HODLing trend
Ether has enjoyed highs that that was last seen two years ago and the holders are anticipating a little more. This was evident from the latest Glassnode chart which showed that ETH held on exchanges has followed a consistent downtrend since mid-August. Conversely, the total supply held off exchanges has risen significantly. Meaning, holders were currently in an accumulation spree.
The upward price action has also resulted in the rise of mean transaction volume which climbed to a 5-month high of 0.236 ETH. Among other things, the number of active addresses has also increased substantially.
In addition, more than 93% of the current supply of ETH is now considered “in the money”. This was according to the charts of data analytic site, IntoTheBlock, which revealed that a significant chunk of addresses were in profit.
More Calls are being bought versus Puts
Gauging at the derivatives space, a sense of optimism was found to have taken over the traders. The decline in the put-call open interest ratio, which hit to a 3-month low, was indicative of this. According to the above Skew chart, the figures declined to 0.77 points which implied that the market is more bullish as investors were buying more calls in anticipation of a bull run ahead.
Bullish Futures Market
Another crucial indicator to understand the investor sentiment is by looking at futures markets premium to perpetual and swaps. The 3-month annualized premium appeared to be above 14%. Also, the 1-month futures contracts are trading above an annualized premium of 20%, indicating that buyers are betting that ETH’s spot price will surge in the near future.
The technicals in ETH’s daily chart aligned with bullish momentum. Looking at the above chart, it can be noted that the daily moving averages acted as crucial support points for the ETH price candles from further decline. Interestingly, after undergoing a golden cross, the 50 DMA [Pink] has not only followed the price appreciation, but also the gauge with the 200 DMA [Purple] has risen, which was further indicative of an increasing positive price sentiment.
The RSI was well above the 50-median neutral zone but has so far not exhausted the buying pressure. This essentially depicted a bullish sentiment among the traders in the market.