While bitcoin (BTC) continues to dominate the recent crypto market rally, attention seems to be gradually shifting to Ether (ETH), the second-largest cryptoasset by market capitalization. Notably, in previous bull markets, ETH has always been among the first cryptoassets to gain massive upward momentum as capital and profit rotates from BTC into altcoins. This profit rotation, often characterized by a decline in bitcoin dominance (BTC.D) in the crypto market, typically marks the beginning of the altcoin season.
The narrative is no different in the emerging bull market as data shows many ETH holders are still holding strong and accumulating. While minimal selling pressure indicates holders’ optimism about ETH’s future price appreciation, Ethereum’s on-chain activity reveals mixed signals and potential resistance levels. However, according to a review by the leading blockchain analysis platform IntoTheBlock, “those levels may prove insignificant in this market.”
Mixed signals for ETH
Per the Thursday update, Ethereum on-chain activity presents both bearish and bullish signals in its current state. Particularly, the report notes that Ethereum’s on-chain activity is rising but hasn’t yet reached levels seen during previous bull markets. The key on-chain indicators highlighted by IntoTheBlock includes new Ethereum addresses, daily transactions count, whale accumulation and transaction volume.
- New Ethereum addresses
New Ethereum addresses are lagging compared to previous bull markets, indicating low interest in ETH. According to the blockchain analysis platform, this development is partly due to the rise of Layer 2 (L2) scaling solutions in the ecosystem such as Coinbase’s Base blockchain, which has gained impressive traction in the past months. High gas fees could be another reason users are boycotting Ethereum.
- Daily transactions
On a brighter note, daily transactions on the Ethereum network have seen a slight increase but not as strong as during past bull markets, IntoTheBlock wrote. Reaching an average daily transactions of 1.22 million in November 2024 from 1.1 million in August 2024, this metric reflects bullish sentiments on ETH.
- Transaction volume and whales accumulation
Transaction volume and whale accumulation of ETH remain on the high side, further showing positive signs for ETH price. According to IntoTheBlock, this suggests “confidence in Ethereum’s long-term potential.”
Considering these key on-chain indicators, the firm concluded that ETH could see a strong upward move if BTC consolidates at its current highs.
Read also: U.S SEC drops investigation on Ether: What It Means for Ethereum’s future
5 Indicators to watch for ETH’s next move
Notably, ETH is trading at $3,300 at the time of writing, down over 5% in the past 24 hours. To further help crypto investors and traders watch out for ETH’s next move, IntoTheBlock discussed five (5) on-chain indicators.
1. Daily Transactions
This refers to the total number of transactions executed on the Ethereum network daily. Notably, increasing daily transaction counts indicate increased network activity, reflecting greater user interaction on the Ethereum network and demand for ETH as a utility token.
As aforementioned, Ethereum is averaging 1.22 million transactions per day, up from 1.1 million three months ago. While encouraging, this growth is less robust than past bull cycles, signaling the need for stronger momentum to ignite a significant rally.
2. Large Holder Netflow
Large holder netflow refers to the net amount of cryptoasset being transferred into or out of wallets held by large holders, often referred to as “whales” or institutional investors. This metric helps investors and traders gauge the behaviour of these significant market participants, who can influence market trends due to the volume they control.
For context, positive netflow would indicate that large holders are accumulating more ETH in their wallets. This could signal bullish sentiment, as these holders might expect ETH’s price to rise. Typically, whale accumulation indicates long-term confidence in an asset, reducing sell-side pressure and stabilizing prices.
Conversely, negative netflow would suggest that large holders are moving ETH out of their wallets, possibly to exchanges for selling or trading. This can indicate bearish sentiment or profit-taking.
Per IntoTheBlock data, whales have been slowly accumulating ETH in the past weeks, showcasing trust in Ethereum’s long-term fundamentals. This trend could act as a foundation for price appreciation, especially if broader market conditions remain favourable.
Read also: Donald Trump’s win, Positive for Ethereum – ConsenSys CEO Joseph Lubin
3. Short-Term Holder (STH) Addresses
Short-term holder addresses refer to wallet addresses that have recently acquired a cryptoasset and typically hold it for a relatively brief period before selling or transferring it. These addresses are commonly associated with speculative trading or high-frequency transactions, as opposed to long-term holders who retain assets for extended durations.
According to IntoTheBlock, a rise in short-term holder activity often coincides with increased retail participation, signaling a potential price surge driven by speculative demand. Historically, ETH benefits from retail-driven activity, especially during bitcoin’s consolidation phases.
However, while an increase in STH addresses might indicate speculative interest in ETH, their mass sell-off of the cryptoasset could signal bearish sentiment.
4. Holding Time of Transacted Coins
The holding time of a transacted coin refers to the duration or average time a cryptoasset is held in a wallet before being transferred or sold. This metric is often analyzed to understand investor behaviour, market sentiment, and coin utility.
Long holding times for ETH may indicate that investors view the cryptoasset as a store of value or are confident in its long-term potential. It also suggests minimal selling pressure from long-term investors, keeping the circulating supply constrained and supporting price growth. Meanwhile, short holding times could suggest speculative trading or frequent utility-based transactions.
Overall, holding time of transacted coins helps market participants gauge whether a cryptocurrency is being used primarily for investment, trading, or as a medium of exchange. IntoTheBlock data further show that ETH holders continue to demonstrate resilience by holding onto their coins, indicating confidence in ETH’s long-term value. This behaviour aligns with reduced sell-side pressure and potential upward momentum.
5. Exchange Flows
This refers to the movement of cryptoassets onto or off crypto exchanges. Typically, high inflows to exchanges often indicate increased selling pressure, as investors might be preparing to liquidate their holdings. Conversely, high outflows suggest accumulation or long-term holding, signaling bullish sentiment as selling pressure is reduced in the market.
Accordingly, increased exchange outflows (or inflows) for ETH could serve as a bullish (or bearish) sign for the cryptoasset.
Read also: Ethereum and Altcoins: What are the Opportunities in the Altcoin Market?
Ndianabasi Tom A Petroleum Engineering degree holder, Ndianabasi’s interest since 2018 has been studying the ever-growing field of blockchain and cryptocurrency, keenly evaluating the innovation, exploration, and expansion of this field locally and globally. The founder of Nitadel a media platform, Ndianabasi has been a Writer at Crypto Asset Buyer (CAB) since 2021. When he is not drilling resources in the blockchain and cryptocurrency field, Ndianabasi is singing, reading, watching crime movies, or playing football.
