Will this positive Ethereum [ETH] observation boost its short-term outlook
Investors have had a close eye on Ethereum’s [ETH] performance since the much-talked about Merge. The key point of interest being an assessment of whether network demand or utility would deteriorate, return to normal, or rise to new highs.
Here’s AMBCrypto’s price prediction for Ethereum [ETH] for 2022-2023
Ethereum’s performance in the last few weeks was enough to provide a rough idea of how the network faired. According to a recent Glassnode analysis, ETH achieved a new all-time high for the total value of ETH in ETH 2.0 deposit contracts. According to the analysis, the value at the time of writing stood at 14.78 million ETH.
— glassnode alerts (@glassnodealerts) November 6, 2022
This observation suggested that Ethereum’s utility in DeFi witnessed a significant uptick. Furthermore, numerous other observations highlighted a similar outcome. For example, the supply of ETH locked in smart contract just achieved a new monthly high at 28.04%.
For context, the total supply locked in DeFi dropped as low as 25.3% at the height of the Merge. Similarly, the total value locked in DeFi saw a strong surge in the last two weeks. It grew from a monthly low of $71.55 billion in October to over $80.2 billion this week.
The latest bullish wave contributed significantly to the amount of ETH locked in DeFi in ETH 2.0. A strong spike was also observed in ETH 2.0 new deposits at the start of the week. However, the pace at which new deposits were coming in dropped, depicting a tapering bullish momentum.
It’s not all bad here…
Regardless of the drop in the pace at which new ETH 2.0 deposits were taking place, the other metrics highlighted a favorable outcome. One can conclude that network utility and demand for ETH have resumed. The value of ETH also went up especially in the last two weeks. Although, it had more to do with the overall crypto market. Nevertheless, organic demand may have contributed to ETH’s upside.
Furthermore, an increase in ETH’s relative strength was also witnessed in the last two weeks. More importantly, the price managed to recover back above $1,600 and had a $1,620 press time price.
ETH demonstrated an affinity for the upside in the last two weeks and the same theme continued this week. This was accompanied by limited sell pressure. This may also have some relation with the fact that ETH still wasn’t overbought and was relatively close to its lower range.
Can Ethereum’s recovering demand fuel more ETH upside?
The observed higher demand for ETH in the DeFi environment was already good news for crypto investors. It confirmed that the network managed to recover well post the Merge. These observations might help ETH shied itself from a harsh price drop in the short-term and place favor Ethereum growth. However, this is not necessarily a guarantee since the retail market still has the biggest impact on ETH demand.