Ether (ETH) rallied to a new year-to-date high of $3,822 on March 5 after rallying 8% over the last 24 hours. The second largest cryptocurrency by market capitalization is up 15% over the last seven days and 132% over the last 6 months.
Data from Cointelegraph Markets Pro and TradingView show Ether’s price was hovering around $3,796, about 28% shy of its all-time high of $4,891 set on Nov. 26, 2021.
Accompanying ETH’s rally is a 68% leap in daily trading volume, currently at $33.29 billion. With a market capitalization of $453 billion, Ether cements its position as the second most valuable cryptocurrency, according to CoinMarketCap.
Apart from the uptrend in the wider crypto market fueled by increased inflows into spot Bitcoin ETFs and the upcoming Bitcoin supply halving, other fundamental factors and on-chain metrics back Ethereum’s uptrend.
One factor supporting Ether’s upside is reducing supply on exchanges. Data from on-chain market intelligence firm Glassnode shows ETH balance on exchanges reached a 20-month low of 13.14 million ETH, after dropping 7.7% over the last 90 days.
The total balance between inflows and outflows in and out of all known exchange wallets shows a steep decline since October 2023, when withdrawals from the trading platforms began to surge. This drop accompanies a 130% rise in Ether’s price over the same time period.
Decreasing ETH balances on exchanges simply means investors could be withdrawing their tokens into self-custody wallets, indicating a lack of intention to sell in anticipation of a price increase in the future.
This is explained by a spike in accumulation by large holders over the last few weeks. More data from Glassnode shows that wallets holding $100,000 or more worth of ETH have been on the rise since the start of February.
The chart above shows that wallets holding $100,000 or more have increased from 94,620 on Jan. 1 to 141, 406 on March 4 This means that whales have not sold on the latest rally in ETH but have continued to accumulate, suggesting most want to position themselves for more gains.
Also contributing to the decreasing ETH tokens available for trade is the increasing amount of Ether staked on the Beacon Chain. According to data from Dune Analytics, over $31.58 million ETH, worth $119.8 billion at current rates, are now being staked on Ethereum’s proof-of-stake layer protocol.
This means 26.3% of ETH supplies have been staked and unavailable in the market, with over 987,000 individual validators involved.
Staking on Ethereum has been further facilitated by liquid staking solutions like Lido, Rocket Pool and EtherFi, which allows for the staking of amounts less than 32 ETH and enables the use of staked assets as collateral in DeFi.
According to data from BlockBeats, the total value locked on EtherFi has crossed the $2 billion mark, highlighting the growing popularity and adoption of Ethereum liquidity protocols.
Increased demand for leverage resulted in a surge in ETH futures open interest (OI), which sat around $11.98 billion, edging closer to the $13 billion peak witnessed on Nov. 9, 2021.
Data from Coinglass shows that Ether futures OI broke above $8 billion on Feb. 12, being pinned under this level for more than two years. From there, the OI has jumped nearly 50% in less than two weeks, suggesting increased demand for leveraged ETH positions.
Currently, Ethereum’s on-chain and derivatives markets reflect investors’ optimism and expectation for a a spot Ether ETF approval The upcoming Dencun upgrade could also be lending some bullish tailwinds to ETH price.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.