Ethereum Worth In the present day – Bitcoin and Ethereum Could Have a Liquidity Disaster | Fintech zoom

The central theses

  • Exchange rate balances have fallen sharply in the past two days.
  • Research by Jarvis Labs analyst Benjamin Lilly points to an impending liquidity crisis for Ether on the stock exchanges.
  • Compared to the previous two upward cycles, the market flow data indicate a higher upward trend.

Share this article

Bitcoin and Ethereum are being taken out of exchange in large quantities. Given this trend, on-chain analysts suggest that prices for both cryptocurrencies could rise higher.

Visible signs of a bubble

In a bullish phase, the market runs hot and cyclically cools. Altcoin prices are rising and entering a bubble-like market. Traders recognize spikes and correction cycles and make higher highs and lows each time.

After all, the market runs out of steam and the local top becomes a generation top. During this boom, liquidity flows towards altcoins, resulting in abnormal profits in the absence of fundamentals.

Again, these are signs of a bubble as altcoins have an irrational exuberance. For example, the Stellar blockchain went out for a short time yesterday, but its native XLM token stuck to the previous day’s 25% gains. Meanwhile, despite the pending securities litigation filed by the SEC, XRP has reached $ 1.

However, on-chain analysis of the two major cryptocurrencies – Bitcoin and Ethereum – suggests that the market has not yet peaked.

Ethereum liquidity crisis

Benjamin Lilly from the on-chain research company Jarvis Labs mapped the connection between the reduction in the stock exchange offer and the ETH price. According to Lilly, ETH is “preparing for a historic run”.

He found that there were 44% fewer Ethereum balances on the exchanges in 2017 and users were pulling ETH back into personal wallets. This time the stock exchanges saw a 25% drop in supply. In addition, the total supply from ETH is 38% higher than last time, which represents greater overall liquidity on the supply side.

The ether supply shifted from the stock exchanges. Source: Jarvis Labs

In addition, exchanges aren’t the only companies holding ETH. Other illiquid ETHs are trapped in DeFi applications (11.5 million ETH), Grayscale reserves (3.17 million ETH), and Ethereum 2.0’s beacon chain (3.7 million ETH). A total of 18 million ETH (15% of the total offer) are locked up.

Lilly predicts that demand will increase and cause explosive price effects. This is thanks to the “growing institutional demand due to the unethical management of the dollar, the grayscale effect” and the general acceptance of crypto in NFTs, the base layer for stablecoins and other FinTech applications.

Bitcoin continues buying trend

Similarly, Bitcoin has also shown no signs of a long-term cycle. Bitcoin’s age distribution bands metric has historically been a robust indicator of market spikes.

The metric, also called HODL waves, separates the Bitcoin addresses based on the last deposit and withdrawal time.

A wide short-term supply band indicates buyers are hyperactive, which has already happened twice near the top of the market. “36% of the offer was active in the last 180 days and was still well below the high of around 50% in January 2018,” wrote Coinmetrics’ Nate Maddrey.

Bitcoin HODL wave display. Source: Coinmetrics

Maddrey drew a similar conclusion from two other metrics: Market Value vs. Realized Value (MVRV) and Spent Output Ratio (SOPR).

Alongside this trend is a large amount of Bitcoin left the exchanges in the past two days when BTC fell below $ 59,000. The steep drop in the yellow line is the biggest increase since November 2020.

Bitcoin offer in exchange vs. offer. Source: Glassnode

The worsening liquidity crisis due to the strong demand intensifies the upswing after short-term consolidation.

At the time of writing, this author owned bitcoin and altcoins valued at less than $ 15.

Share this article

The information on or through this website is obtained from independent sources which we believe are correct and reliable. However, Decentral Media, Inc. does not warrant or guarantee the currency, completeness, or accuracy of any information on or through this website. Decentral Media, Inc. is not an investment advisor. We do not provide personalized investment advice or other financial advice. The information on this website can be changed without prior notice. Some or all of the information on this website may be out of date, incomplete or inaccurate. We may, but have no obligation, to update outdated, incomplete, or inaccurate information.

You should never make an investment decision for an ICO, IEO or any other investment based on the information on this website and you should never interpret or otherwise rely on any information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional when seeking investment advice on an ICO, IEO or any other investment. We do not accept any compensation for analysis or reporting of ICO, IEO, cryptocurrency, currency, token sales, securities or goods.

See full terms and conditions.

“I might be missing something,” says billionaire Bitcoin B …

Ray Dalio, founder of Bridgewater Associates, posted a series of tweets on Bitcoin fundamentals on Nov. 17 after being surprised that BTC exceeded $ 17,000. Dalio admitted that his bearish analysis …

Bakkt launches its Bitcoin Payments app

Bakkt has launched its official payments app that allows users to buy, sell, and spend Bitcoin and other digital assets. Bakkt app available to everyone Although Bakkt had early access …

Ethereum back above $ 2,000 as the market rally continues

Ethereum hit $ 2,000 for the second time in its history. Ethereum Price Rally After a week of green candles for Ethereum, the secondary cryptocurrency is trading above $ 2,000 again. …

What are non-fungible tokens (NFTs)?

Tokenization works well for commodities like fiat currencies, gold, and physical land. By displaying a fungible asset on the blockchain, goods can be traded around the clock via limitless and smooth transactions. Fungible goods are …

Comments are closed.