- An increased outflow of Ethereum reserves from exchanges suggests that the ETH price could double in the short term.
- DeFi sector governance tokens could offer the highest profit opportunities.
Close to retaking its all-time high, Ethereum‘s price has outperformed Bitcoin recently. Therefore, analysts are bullish while the indicators point to an extension of the uptrend in the short term. At the time of publication, the price of the Ethereum was trading at $1,400 with a 4.50% profit in the last 24 hours. In the weekly and monthly charts, Ether records gains of 13.2% and 122.2% respectively, while the market cap reached $160 billion.
Among the bullish indicators for Ethereum is the rapid growth of the DeFi sector. With an all-time high of $26.24 billion in Total Value Locked (TVL), Ethereum’s DeFi ecosystem continues to grow strongly, as the following graph indicates.
The top 5 DeFi protocols are hosted on Ethereum: Maker, Aave, Compound, Uniswap, and Curve Finance. The combined TVL of these protocols exceeds $10 billion. In comparison, a year ago the DeFi sector was worth much less than $1 billion.
Over the past months, most of the major DeFi protocols have been updated or had new products launched that seeks to encourage greater investor participation. Therefore, innovation and rewards will continue to be a key factor in sustaining DeFi’s growth and consequently positively affect the price of Ethereum, as Circle CEO Jeremy Allaire stated:
New ETH ATH, the entire DeFi landscape will experience explosive growth.
The growth of the DeFi sector has led to a record number of active Ethereum addresses with a daily average of 550,000. Meanwhile, the number of addresses with more than 10,000 ETH ATH is at a 13-month ATH, according to data from Glassnode. In just 30 days, 32 “new whales” have surfaced.
In conjunction with the above, the amount of Ethereum reserves on exchange platforms has fallen to a 15-month low and continues to fall. This could indicate that large investors are accumulating ETH. Consequently, analyst Lark Davis believes that the price of ETH could double in the next two weeks.
However, data from IntoTheBlock indicates that 934,000 ETH specifically came out of the Bitstamp exchange. More than a market trend, this could have happened in anticipation of the launch of new regulations in the Netherlands, the exchange’s home. As of today, Bitstamp users must comply with a much stricter KYC procedure to withdraw their funds.
Staggering amounts of $ETH continue to find their way out of centralized exchanges.
This Friday, @intotheblock Netflows Indicators spotted the largest withdrawal of ETH in almost 4 years.
Over 934,000 ETH were removed that day, the majority coming from Bistamp. pic.twitter.com/A00gJHwjdp
— IntoTheBlock (@intotheblock) January 24, 2021
Which token on Ethereum DeFi will offer the highest yields?
Although Davis’ prediction is already bullish, some traders believe that Ethereum could present a Bitcoin-like upside scenario like in 2017. At that point, BTC reached its all-time high by rising from $1,000 to $20,000.
In any case, anonymous trader Cred expects the DeFi sector to closely follow the upward trend in the price of Ethereum. In particular, the governance tokens of the major DeFi protocols present great profit opportunities. His Favorite tokens include AAVE, SUSHI, and UNI. He also indicated that he is bullish on Chainlink (LINK) and Polkadot (DOT).
Cred stated via Twitter:
If requirements are met, I’d expect ETH to outperform in the first leg during price discovery but for DeFi to remain bid. The simplest means of acting on this would be via ETH/USD longs. Other alts likely higher beta. Eyes on: Uni, Sushi, Link, Dot, Aave.