Ether (ETH) surged to a fresh year-to-date high of $3,822 on March 5, following an 8% rally in the past 24 hours. The second-largest cryptocurrency by market capitalization has gained 15% in the last seven days and 132% in the last six months.
According to data from Cointelegraph Markets Pro and TradingView, Ether’s price was hovering around $3,796, which is about 28% below its all-time high of $4,891 set on November 26, 2021.
Accompanying the rally in ETH is a 68% increase in daily trading volume, currently standing at $33.29 billion. With a market capitalization of $453 billion, Ether solidifies its position as the second most valuable cryptocurrency, according to CoinMarketCap.
Besides the overall uptrend in the broader crypto market driven by increased inflows into spot Bitcoin ETFs and the upcoming Bitcoin supply halving, other fundamental factors and on-chain metrics support Ethereum’s upward trend.
One factor that supports Ether’s upside is the decreasing supply on exchanges. Data from on-chain market intelligence firm Glassnode shows that ETH balance on exchanges has reached a 20-month low of 13.14 million ETH, declining by 7.7% in the last 90 days.
The total balance between inflows and outflows in all known exchange wallets has shown a significant decline since October 2023, coinciding with a surge in withdrawals from trading platforms. This decrease aligns with a 130% increase in Ether’s price during the same period.
The decrease in ETH balances on exchanges suggests that investors may be withdrawing their tokens into self-custody wallets, indicating a lack of intention to sell in anticipation of future price increases.
This is supported by a surge in accumulation by large holders in recent weeks. Additional data from Glassnode reveals that wallets holding $100,000 or more worth of ETH have been increasing since the beginning of February.
The chart above illustrates that the number of wallets holding $100,000 or more has risen from 94,620 on January 1 to 141,406 on March 4. This indicates that whales have not sold during the latest ETH rally but have continued to accumulate, suggesting they expect further gains.
Another contributing factor to the decreasing availability of ETH for trading is the growing amount of Ether staked on the Beacon Chain. According to data from Dune Analytics, over $31.58 million ETH, equivalent to $119.8 billion at current rates, is currently being staked on Ethereum’s proof-of-stake layer protocol.
This means that 26.3% of the ETH supply has been staked and is unavailable in the market, with over 987,000 individual validators participating.
The rise of liquid staking solutions like Lido, Rocket Pool, and EtherFi has further facilitated staking on Ethereum. These solutions allow for the staking of amounts less than 32 ETH and enable the use of staked assets as collateral in decentralized finance (DeFi) applications.
According to data from BlockBeats, the total value locked on EtherFi has surpassed $2 billion, highlighting the increasing popularity and adoption of Ethereum liquidity protocols.
Increased demand for leverage has resulted in a surge in ETH futures open interest (OI), which currently stands at around $11.98 billion, approaching the peak of $13 billion observed on November 9, 2021.
Data from Coinglass shows that ETH futures OI broke above $8 billion on February 12, remaining below this level for over two years. Since then, the OI has increased by nearly 50% in less than two weeks, indicating growing demand for leveraged ETH positions.
Currently, Ethereum’s on-chain and derivatives markets reflect investors’ optimism and expectations for the approval of a spot Ether ETF. The upcoming Dencun upgrade may also be contributing to the bullish momentum in the ETH price.
It is important to note that this article does not provide investment advice or recommendations. Investors should conduct their own research and analysis before making any investment or trading decisions.