Ethereum: Yearly TVL high could boost ETH, but risks persist

• Ethereum recently hit its highest Total Value Locked (TVL) of the year, reflecting increased activity.
• Despite this milestone, bullish sentiment was tempered by ongoing concerns over negative netflows.

Ethereum [ETH] has gained 48.39% over the past month, but its upward momentum has slowed. In the past week, the price climbed 9.0%, with a smaller 0.36% increase in the last 24 hours. 

This dip in buyer activity suggests some hesitation among investors compared to earlier surges.

Analysis from AMBCrypto points to a potential rally, but ETH will need to address its negative netflow issues to sustain any significant price movement. Overcoming these challenges could set the stage for further gains.

Investor confidence in ETH grows

Recent data from DeFiLlama showed a significant surge in Ethereum’s Total Value Locked (TVL), which has climbed to $71.575 billion. This marks its highest level this year and a peak last seen in 2022.

Source: DeFilLama

TVL measures the total value of assets locked, staked, or deposited into protocols on a blockchain. In Ethereum’s case, it serves as a key indicator of the network’s health.

A strong TVL suggests high market confidence, with participants actively investing in the ecosystem.

This rise in TVL points to a stronger market and growing investor interest in Ethereum. Such developments often translate into higher demand for the asset, potentially driving its price further upward.

Renewed optimism

Ethereum has seen consistent support from derivatives traders, with positive funding activity.

At the time of writing, ETH’s November Funding Rate was higher than in previous months, showing steady growth not witnessed in the past four months.

Source: Cryptoquant

The Funding Rate represents periodic payments between traders to align the price of futures contracts with the spot market.

A positive Funding Rate, at 0.0235 at press time for ETH, indicates that long traders are paying to bridge the gap. This is often a bullish signal, suggesting upward momentum.

Additionally, the Take Buy Sell Ratio, which measures the balance between buyer and seller volumes, showed that buyers were gradually regaining control of the ETH market.

Over the past 24 hours, the ratio has risen to 0.984, signaling renewed interest in ETH and hinting at potential price gains.

If both the Funding Rate and the Take Buy Sell Ratio continue to trend upward, ETH’s price is likely to follow, reinforcing bullish sentiment in the market.

Delayed rally likely as outflows surge

At the time of writing, Ethereum has recorded high chain netflows, with $96.4 million worth of ETH withdrawn from the network in the last 24 hours.

Read Ethereum’s [ETH] Price Prediction 2024–2025

This occurs when the outflow of liquidity from the blockchain exceeds the inflow. In this case, the sharp disparity in favor of outflows reflects a notable withdrawal of funds from the network.

Source: Artermis

If this trend continues into the week, the anticipated rally for ETH could face significant delays. Instead of a major price movement upward, the asset may experience stagnation or even a potential decline.