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Thursday, September 16, 2021

Ethereum Sits Comfortably About $4K, What’s Truly Fueling The Rally?

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Ethereum unstoppable rally keeps on ranging towards uncharted territory. The cryptocurrency has been on seamlessly never-ending price discovery in 2021. The outlook is bullish and any prediction, at the moment, seems conservative.

At the time of writing, ETH trades at $4,162 with a 9.3% in the daily chart. In the weekly and monthly chart, ETH has a 41% and a 101%, respectively. The market capitalization stands at $480 billion after a 1,878% rally in the 1-year chart.

Ethereum ETH ETHUSD
ETH rally in the daily chart. Source: ETHUSD Tradingview

Data provided by Ki-Young Ju, CryptoQuant’s CEO, suggest institutions are behind this rally. As shown in the chart below, ETH’s price has been on the rise as outflows transactions grow.

Unlike 2018, when ETH reached its previous all-time high near $1,500 and there was a rise in inflow transactions count for all exchanges. This suggests investors are long-term bullish on further appreciation. Young Ju said:

Still incredibly fewer $ETH deposits and more withdrawals across all exchanges.  It’s hard to say we’re at the top. Increasing exchange withdrawals could indicate #Ethereum ecosystem is growing and people are holding them, not selling.

Ethereum ETH ETHUSD
Source: CryptoQuant via Ki Young Ju

Additional data provided by Young Ju claims the rally could be fuel by institutional buyers. Coinbase Pro has been the go-to platform for institutions to enter the crypto market, with Tesla and MicroStrategy buying Bitcoin with this service.

In the past, Coinbase Pro premium skyrockets when institutions make their purchases which are reflected upon a cryptocurrency’s price. As Young Ju points out, this premium has risen with ETH’s price since December 2020.

Ethereum ETH ETHUSD
Source: CryptoQuant via Ki Young Ju

Ethereum To $50K In 2020? Investors Bet On It

Chief Investment Officer at Moskovski Capital, Lex Moskovski claimed that ETH buying has come from spot buyers. In the futures market, the funding rate has remained low despite the constant appreciation which indicates potential sustainability. Moskovski said:

Compared to the slope of the price curve and the funding rate of the previous run-ups it’s almost nothing.

ETH ETHUSD
Source: Glassnode via Lex Moskovski

Glassnode has recorded new all-time highs in the number of addresses holding 1+ ETH with a total of 1,224,176. This could suggest that retail investors, like institutions, are buying ETH as its price has surged with this metric. ETH Realized Price also reached a new all-time high with $1,068.

ETH ETHUSD
Source: Glassnode

All Ethereum-based markets have experienced record activity in spot, futures, and options, as Skew reveals.

Some investors in the options market have a position open due to expire in March 2022. The strike on this position puts ETH’s price at $50,000, as trader Ryan Cantering Clark stated:

Ethereum 50k strike March 2022 expiration already up 24% since listing today. Not for nothing, that’s a nice amount of volume, and if using delta as the crude measure of the probability of expiring ITM… Probably 5-11%?

ETH ETHUSD
Source: Ryan Cantering Clark

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