Early in the morning of February 15, the ETH fell to $ 1,660, followed by a 9% rebound within 10 hours. This move resulted in a $ 280 million settlement of futures contracts, indicating increased influence from long positions.
While initial concerns about the release of Ethereum futures contracts on the Chicago Mercantile Exchange on Feb. 8 appear to have faded, persistent excessive transaction fees could undermine investor confidence. Ethereum’s fundamentals remain strong, indicating that the ETH price will recover quickly from potential falls.
Although the scale above can be interpreted positively, not all users can afford a $ 12 commission. Simple token exchanges on decentralized exchanges (DEXs) can cost hundreds of dollars in gasoline taxes, so small traders have no choice but to withdraw from the network.
Several supporters are testing retail and Tier 2 solutions to address this issue, including Scale and Optimistic Network. Eth2 will use hashing to divide the blockchain into several parts and increase the number of transactions the network can handle simultaneously.
Total value locked in a trend
The massive increase in Total Confined Value (TVL) in decentralized financing projects cannot be ignored. The revised calculation tries to remove a reading of rising ETH prices, and thus provides more reliable data.
As shown above, the 34% increase over the last 30 days corresponds to a 38% increase in ETH in February. Apart from transaction fees, automated marketing teams and gaming mechanisms still create value.
More data is needed to understand whether the recent crash reflects a potential local peak and a subsequent downward move. In addition to price action and technical analysis, investors should also evaluate calculations on the network, for example by using the network. A great place to start is to analyze transactions and transfer costs.
Coin Metrics data shows that 14-day average transactions and conversions are growing at more than $ 9 billion per day, up 32% from last month. This significant increase in transaction and transfer costs indicates strength and indicates that the Ether price is stable at the current level.
Withdrawals to the stock exchange indicate a long-term hold
Although there is no agreement among analysts on the short-term effect of the price withdrawal, the effect is either neutral or bullish. Unwanted movement, large continuous flows, is the only downward scenario, as it indicates the willingness of shareholders to sell.
ETH / USD price (black) versus ETH reserve on the stock exchange (red). Source: CryptoQuant
From 1 January to 15 February, approximately 600,000 ETHs were withdrawn from stock exchanges. Whether the whales move to cold wallets or put ether into the DeFi ecosystem, it is unlikely that these coins will be sold in the short term.
Given that this move occurred when Ethereum reached a full-time high of $ 1870, the indicator signals the wearer’s confidence.
Finally, based on network metrics and a trading perspective, there are encouraging signs that $ 2000 is available and deflationary times are actively buying.