Ether Hits Yearly High Amid Increased Staking and Trading Volume Surge
Summary:
Ether (ETH), the second-largest cryptocurrency, reached a yearly high of $3,822 on March 5 with a trading volume surge of 68%. The rise has been attributed to factors such as reduction of exchange supply, indicating investors' anticipation of price rises and increased accumulation of ETH by large holders. Staking on the Beacon Chain also increased, resulting in reduced ETH availability for trade. Moreover, a surge in ETH futures open interest reflects increased demand for leveraged ETH and investor optimism.
Ether (ETH), the cryptocurrency with the second-largest market capitalization, hit a new high for the year at $3,822 on March 5, having gained 8% in the preceding 24 hours. The last week saw a rise of 15%, and the past six months, a 132% hike. According to data from Cointelegraph Markets Pro and TradingView, Ether levelled off around $3,796, which is a 28% increase from its record high of $4,891 set on November 26, 2021.
The jump in ETH's price coincided with a surge in daily trading volume by 68%, reaching $33.29 billion. This brought Ether's market capitalization to $453 billion, confirming its position as the world's second most valuable cryptocurrency, as per CoinMarketCap figures.
A range of factors underpin Ether's climbing rate. These include decreased reserves on exchanges - data from Glassnode, an on-chain market intelligence firm, showed that ETH holdings on exchange platforms plummeted 7.7% over the last 90 days to a 20-month low of 13.14 million ETH. This suggests that investors are moving their tokens into personal custody wallets in expectation of future price rises.
Supporting this interpretation is the rising number of large holders accumulating Ether over the past few weeks. Figures from Glassnode indicate that since February, wallets holding over $100,000 of ETH have increased in number from 94,620 on January 1 to 141,406 on March 4.
An increase in Ether staked on the Beacon Chain also contributes to reducing available ETH for trade. Current data from Dune Analytics reveals over $31.58 million ETH, equivalent to $119.8 billion at today's rates, are staked on Ethereum's proof-of-stake layer protocol. This implies that 26.3% of ETH supplies have been staked in this way, secured by over 987,000 individual validators, and are thus removed from the market.
Lastly, growing interest in leverage has triggered a rise in ETH futures open interest (OI), now at around $11.98 billion - near the $13 billion peak seen on November 9, 2021. Data from Coinglass shows that Ether futures OI surpassed $8 billion on February 12, after a two-year period below this level, indicating a growing demand for leveraged ETH positions.
Overall, the current dynamics of Ethereum’s on-chain and derivatives markets indicate investor confidence and a potential anticipation of an approval of a spot Ether ETF. Additionally, the forthcoming Dencun upgrade could be bolstering the ETH price.
As always, investments and trading carry inherent risks and conducting personal research is advised.
Published At
3/5/2024 10:33:02 PM
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