Ethereum hit its all-time high yesterday and jumped to $ 1,459. In general, ETH broke the price record from January 2018 on the nineteenth, when its value reached $ 1,424.
However, not all traders agreed with the maximum asset price at the level of $ 1,420 agreed in advance, so the cryptocurrency needed a new breakthrough to close all the issues. Be that as it may, now ETH is definitely ahead of the former levels. Quantum Economics analyst Pedro Febrero spoke about the situation.
Note that after the establishment of a new all-time high, the Ethereum rate dropped noticeably. In particular, today it is $ 1,322, which is 5.2 percent less than a day ago.
Despite this, the profitability of the cryptocurrency over a longer period of time continues to delight. For example, in two weeks, ETH brought investors 21 percent growth, while in a month its price doubled. Finally, the annualized return is 723 percent, which is significantly higher than Bitcoin’s corresponding 284 percent return.
The current drawdown of the Ethereum rate after a new high in the price is noticeable on the four-day chart. Here is the behavior of the asset for this period.
What will happen to the Ethereum course
According to experts, the growth of the Ethereum rate is primarily due to the massive withdrawal of cryptocurrency from centralized exchanges. The logic is simple: there are less and less coins in circulation, competition for their acquisition is growing, but this affects the value of the asset.
As analysts at Glassnode note, the ETH balance on major crypto exchanges has now reached a 15-month low of 15.4 million ETH for the equivalent of $ 20.35 billion. The massive outflow of coins began on Tuesday, when there were 16.6 million ETH on the exchanges, which means that $ 1.6 billion left the trading floors.
According to Pedro Febrero, there are three reasons for the outflow. First, Ethereum is being massively withdrawn for interacting with DeFi protocols, that is, trading on the Uniswap exchange, obtaining loans or something similar.
This sounds like a serious reason, but in reality, things are a little different. According to DeFi Pulse, the number of Ethers in DeFi protocols dropped from 7 million on Tuesday to 6.9 million the next day. That is, it is obvious that not all withdrawn coins went exactly to the niche of decentralized finance, Decrypt reports.
Another reason from Febrero is the increase in the number of ETH blocked in the deposit contract for staking in Ethereum 2.0. This version is more suitable for the situation: some of the coins from the exchanges have definitely gone to this smart contract. On January 19, 170 thousand ETH were sent to Ethereum 2.0, and after a couple of days the volume of the cryptocurrency in the contract increased by 200 thousand ETH.
Today the contract contains 2.83 million ETH in total.
Finally, the third possible reason is the active investment of large companies in Ethereum. The analyst also mentioned that the Grayscale fund allegedly accumulates ETH in its account. Hence the withdrawal of coins: companies rely on long-term storage of cryptocurrencies, so they massively withdraw them from exchanges to cold wallets. Unfortunately, this version is at variance with the information of the bybt portal. According to her, Grayscale hasn’t bought ETH for its trusts for a relatively long time.
We believe that both ordinary and relatively large investors had a hand in the outflow of coins. The day before, Ethereum set a new all-time high, reaching the $ 1,459 line, according to the Coingecko portal. Usually, a breakout and a new record on the chart is accompanied by an influx of investors who expect the asset to continue to rise due to the lack of resistance on the chart. At least Bitcoin, after breaking through the record $ 20,000 in December 2020, managed to double in price in just a few weeks. Obviously, ETH holders are hoping for a similar scenario, and therefore withdraw coins for safe storage as soon as possible.
One way or another, Febrero admits that the very fact of the outflow of coins from exchanges can be called a positive phenomenon. It speaks of a decrease in the activity of sellers and a high probability of a new wave of Ethereum growth.
Judging by what is happening, the owners of ethers prefer to store their coins not on centralized exchanges, but in another place. A similar trend has been observed in recent months with Bitcoin. The situation is good, since it puts investors at least one step away from selling their assets on the exchange. I would like to believe that their expectations will come true in the near future.