Ethereum (ETH) price reached $1,950 on Thursday as the bulls forced another leg-up toward the $2,000 resistance. On-chain analysis uncovers the major drivers behind ETH’s recent price jump.
Ethereum holders’ on-chain activity this week suggests that most investors are targeting much larger gains. Will ETH break toward $3,000 or enter a bearish reversal?
Ethereum Investors Moved 263,520 ETH into Long-Term Storage This Week
After a brief consolidation phase at the start of the month, ETH’s price broke above the $1,900 resistance on Nov. 9. On-chain data shows that ETH holders moving their coins into long-term storage this week have been pivotal to Ethereum’s price bounce on Thursday.
According to data from IntoTheBlock, ETH exchange netflows have been negative in the last seven days. A closer look at the chart below further emphasizes that investors shifted 263,520 ETH from crypto exchange wallets into long-term storage between Nov. 3 and Nov. 9.
Ethereum (ETH) Exchange Netflows | Source: IntoTheBlock
Exchange netflows provide a daily snapshot of the difference between total outflows and new inflows into crypto exchange wallets. A negative netflow value indicates that investors are moving more coins out of exchanges and into self-custody. This implies that they have opted to HODL their ETH assets rather than seek out short-term profit opportunities on exchanges.
Valued at the current price of $1,920, the 263,520 ETH outflows this week are worth approximately $505 million. Evidently, this large reduction in the number of coins readily available to be traded on the exchange spot markets has impacted Ethereum prices positively this week.
If this trend persists and market demand remains steady, ETH price will likely smash through the $2,000 resistance.
Read more: How to Buy Ethereum (ETH) and Everything You Need to Know
Derivatives Traders Invested $1.2 Billion in Ethereum in Past Month.
Bullish trading activity among crypto derivatives traders is another major driver behind this week’s latest ETH price rally. According to crypto trading analytics platform Coinalyze, Ethereum futures markets have witnessed a noticeable increase in fresh capital inflows over the last 30 days.
The chart below illustrates that ETH open interest stood at $4.20 billion as opening on Oct. 8. As of Nov. 9, that figure has ballooned to $5.42 billion, representing fresh investment inflows of $1.22 billion within the past month.
Ethereum (ETH) Open Interest | Source: Coinalyze
In the context of derivatives trading, open interest is the total number of outstanding or unsettled contracts for a particular asset. It represents the total number of contracts, both longs and shorts that currently exist for a particular crypto asset.
Typically, an increase in open interest denotes new market entrants and fresh capital inflows. When investors keep bringing in fresh capital inflows during a market rally, it emphasizes their confidence in the asset’s short-term price prospects.
Hence, the $1.22 billion increase in ETH open Interest over the past month is a key indicator that investors are still betting big on the current price trend.
If this thesis holds, Ethereum holders and spot market traders can anticipate more upside in the days ahead.
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ETH Price Prediction: Road to $3,000?
From an on-chain perspective, the large decline in exchange supply and increasing open Interest are clear bullish indicators. And with these metrics still trending upward, Ethereum is in a prime position to extend its gains toward $3,000.
The Global In/Out of the Money (GIOM) data, which groups the current Ethereum holders according to their entry prices, also affirms this bullish prediction.
It, however, shows that ETH must first scale the initial resistance at $2,100 for the bulls to be confident of reclaiming $3,000. As depicted below, 6.37 million holders had bought 38.3 million ETH at an average price of $2,165. If those holders close their positions early, they could slow down the Ethereum price rally.
But if the bulls can surmount that obstacle ETH price will likely edge closer toward $3,000 as predicted.
Ethereum (ETH) Price Prediction | GIOM data – Source: IntoTheBlock
Yet, the bears could negate the optimistic prediction if the Ethereum price reverses below $1,700. However, 4.99 million ETH holders had bought 10.58 million ETH at the minimum price of $1,800. If the exchange supply keeps dwindling, that support wall will likely stand firm.
But if that support caves, the ETH price could retrace below $1,700.
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