Ethereum registered a new ATH at $2000 yesterday and at the time of writing has dipped slightly on the price charts. The price is up by over 5 % in the past 24 hours and over 12.5% in the past week and the recent price action is making retail traders ask if this is Ethereum’s way of compensating those who missed opportunity when the likes of Bitcoin traded at a fairly low price last year.
Source: Etherscan
Since Ethereum’s price hit a new high, one of the key metrics that indicate the direction of the price rally is the total number of transactions. Based on data from the Etherscan chart, the total number of transactions on the ETH network is currently close to crossing the ATH of 1.4 million that was registered in September 2020. Currently, the number of transactions is 1.29 million, and is increasing.
For the price to sustain a level close to or above $2000, trade volume should ideally hit a new ATH. The asset’s price has increased by over 160% since the beginning of 2021, and this makes the asset compete well with Bitcoin, which has an ROI of over 90% since the beginning of 2021. Major altcoins have registered double-digit gains, however, a pullback has followed, and price swings have occurred over two times since January 2021.
In the case of Ethereum, the pullbacks in price have been less intense and it is likely that the trend continues with the price hitting higher levels without serious corrections in the short term. Similar to the case of Bitcoin, Ethereum is deriving value from the supply shortage and Ethereum outflow from exchanges has increased.
Source: CryptoQuant
Based on the above chart the outflow has been increasing since the beginning of Feb 2021. Though it is less in comparison to that of January 2021, the current outflow is at the same level as Q4 of 2020. The outflow signals that Ethereum is leaving exchanges for private wallets, or cold storage, and this may help Ethereum by propelling it to yet another ATH. The on-chain analysis is neutral, however, $2000 may be here to stay, till Ethereum hits another short-term top or the price rallies further.
