Ethereum’s short-term holders rise – What does this mean?

• Ethereum was undervalued at press time. 
• Market indicators looked bearish on the altcoin. 

As Ethereum’s [ETH] price crossed the $4,000 mark, most investors expected the next target to be $5k.

Furthering this notion was Ethereum’s price action, which rose by more than 8% in the last seven days, according to CoinMarketCap.

STHs are reaching new highs

At the time of writing, ETH was trading just below the $4k mark at $3,987.46 with a market capitalization of over $4789 billion.

At the same time, IntoTheBlock posted an

Historically, this number increases during bull markets, once new users join the network and become active, and decreases in bear markets, as only long-term holders remain.

Source: TradingView

The number of Ethereum traders has recently increased dramatically, approaching the top of the last bull cycle (light-red arrow).

The last time the metric reached that level, it was followed by a further price rally, allowing ETH to reach an all-time high. If history repeats itself, then this just might be the beginning of ETH’s bull rally. 

What can we expect from Ethereum?

Since the aforementioned analysis looked bullish, AMBCrypto took a look at ETH’s metrics to understand whether the uptrend would last.

Our analysis of Glassnode’s data revealed that Ethereum’s Network Value to Transactions (NVT) ratio registered a downtick at press time.

Whenever the metric drops, it means that an asset is undervalued, hinting that the chances of a price increase are high. 

Source: Glassnode

CryptoQuant’s data revealed that ETH’s net deposit on exchanges was low compared to the last seven-day average. This was bullish, as it indicated less selling pressure on the token.

Mentioning market sentiment, AMBCrypto found that buying sentiment was dominant among U.S. investors, as the Coinbase Premium was green.

However, Korean investors continued to sell ETH, which was evident from the red Korea Premium.

Source: CryptoQuant

To double-check whether a further bull rally is possible, AMBCrypto then checked ETH’s daily chart.

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It was surprising to note that while the metrics looked bullish, Ethereum’s technical indicators told a different story.

The Relative Strength Index (RSI) was in the overbought zone. The Chaikin Money Flow (CMF) also registered a downtick. These indicators suggested that ETH’s bull rally might come to an end soon. 

Source: TradingView