Ethereum (ETH) flirts around $3,100 levels, here are the key on-chain metrics to watch

  • The Ethereum exchange reserves have declined 20 percent over the last year.
  • On the flip side, a large number of ETH has been moving to Ethereum 2.0 deposit contracts.

The world’s second-largest cryptocurrency Ethereum (ETH) has had a phenomenal rally so far in 2021. Earlier this week, the ETH price surged all the way to $3,350 levels. However, it has faced a partial retracement since then. As of the press time, ETH is down 3.3 percent trading at $3,113 levels and a market cap of $365 billion.

However, the improvements in on-chain data show that Ethereum fundamentals are strong for now. On a yearly chart, the Ethereum (ETH) supply held by the exchanges has dropped significantly. On-chain data provider CryptoQuant notes that over the last year, the ETH reserves on all trading platforms 26.29 million ETH to 19.22 million ETH. It means that traders are more willing to hold their ETH for further profit gains, rather than opting for profit booking.

ETH burning post London hard fork

The ETH burning, post the London hardfork and EIP-1559 implementation, has gathered steam recently. Over 96,409 ETH coins have been burnt till data post the London hardfork earlier in August this month. Citing data from CryptoQuant, crypto analyst TheBullduck writes:

The Ethereum supply is melting like an athlete running a marathon on a hot summer day. The current amount of ETH burned after London Hardfork 96,409 and keep increasing.

Additionally, when we look at the CQ ETH 2.0 Staking Rate data, it shows us that more than 6 pecent of the total supply is locked to ETH 2.0 What is looking even more bullish to me is that ETH reserves on CEX dipped to 18.98 million and deposits across all the CEX substantially plunged.

More than 6 million ETH coins have been currently staked with Ethereum 2.0. Thus, a staggering $18 billion worth of Ethereum lies in the Ethereum 2.0 deposit contracts.

Courtesy: CryptoQuant

Furthermore, the Ethereum blockchain activity has also picked up recently. Over the last month, the total number of unique addresses with 0.1 ETH has seen an uptick of 1.67 percent. On a one-year chart, the number of unique addresses has jumped by 30.87 percent. During the same period, the ETH price has also surged 42 percent so far.

Besides, the much-awaited London hardfork introduced some major changes to the Ethereum blockchain. With the gas-burning mechanism implemented through the EIP-1559 protocol, the London hardfork has put deflationary pressure on the Ethereum blockchain.

ETH price action

Lyn Alden, founder of Lyn Alden Investment Strategy, has referred to the London hardfork as a bullish event. Alden believes that it can easily push the ETH prices to $5000 USD and upwards.

The world’s second-largest cryptocurrency has registered strong gains so far in 2021. ETH is trading at 300 percent gains year-to-date. Data from Skew analytics also show that that the ETH market cap as a percentage of the BTC market cap has doubled since the beginning of 2021.

About Author

Bhushan is a FinTech enthusiast and holds a good flair for understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In his free time, he reads thriller fictions novels and sometimes explores his culinary skills.

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