On Jan. 4, Ether (ETH) price rallied to $1,160, which was followed by a 24% correction within the following four hours.
What is clear is that investors are anxiously awaiting the CME’s ETH futures launch, which is scheduled for Feb. 8. Another factor driving the current rally is that Ether miners’ balances reached a two-year low, a scenario that some analysts view as bullish.
The phenomenal growth of total value locked in decentralized finance projects has also played a part, especially considering that the metric reached $17.5 billion over the past week.
For the time being, the flow of positive news and solid fundamentals seem to be in play for Ether, but it is still important to try and understand whether the recent crash reflects a potential local top or if it was simply a retest of $900 as a new support level.
Aside from price action and technical analysis, investors should also gauge the use metrics on the Ethereum network. An excellent place to start is analyzing transactions and transfer value.
The chart above shows the indicator spiking above $4 billion in daily transactions, a 73% increase when compared with the previous month’s $2.6 billion. This noticeable increase in transaction and transfer value signals strength and also suggests that Ether price is sustainable at the current levels.
Exchange withdrawals are paused for now
Increasing withdrawals from exchanges can be caused by multiple reasons, including staking, yield farming and buyers sending coins to cold storage. Usually, a steady flow of net deposits indicates a willingness to sell in the short term.
From Dec. 1 to 19, exchanges faced net withdrawals of 600,000 ETH. This move signals a potential accumulation from whales, either transferring to cold wallets or putting those Ether into the DeFi ecosystem.
It is worth noting that over the past two weeks, there has been some stabilization. Selling activity was expected as Ether price peaked, and this led to larger deposits. Therefore, the indicator stands slightly positive.
The futures premium peaked, but nothing abnormal has occurred
Professional traders tend to dominate longer-term futures contracts with set expiry dates. By measuring the expense gap between futures and the regular spot market, a trader can gauge the level of bullishness in the market.
The three-month futures should usually trade with a 1.5% or higher premium versus regular spot exchanges. Whenever this indicator fades or turns negative, this is an alarming red flag. This situation is known as “backwardation” and indicates that the market is turning bearish.
The above chart shows that the indicator peaked at 6.4% on Jan. 4 as Ether touched its highest price since May 2018. The current 4.7% rate above equals a 20% annualized…