A Week of Highs and Lows for Ether (ETH)

The past week has been nothing short of a suspense thriller for Ether traders, with no less than seven four-hour candles showcasing wild price swings of 10% or more. Talk about a nail-biter! The most recent dip, a whopping 30% plunge to $920, led to a staggering $550 million in liquidations on long futures contracts. Just when you think it couldn’t get crazier, this price drop unfolds merely four weeks before the launch of CME’s highly-anticipated ETH futures.

The Phenomenon of an 85% Rally

Did even the most optimistic Ether enthusiasts foresee an 85% surge within just eight days? As the price climbed from $800 to an impressive $1,350—only 5% shy of its all-time high—it’s safe to say that many were caught off guard. The market dynamics driving this spike are far more diverse than in 2017 when ICO mania sent ETH on a similar upward trajectory. Today, the Ethereum network’s extensive DeFi platforms heavily influence the surge, with Ether acting as the primary asset fueling these initiatives.

Fundamentals Remain Strong Amidst the Storm

What’s really fascinating is the lack of negative news surrounding Ethereum. It’s like the calm under the storm, with data indicating that Ether’s fundamentals remain robust. Investors are surprisingly relaxed, biding their time before the eagerly-anticipated developments of the Eth2 network.

Decoding Recent Price Movements

As traders ponder whether this downtrend signals a potential local top, it’s critical to evaluate network usage metrics on Ethereum. A keen place to start is by analyzing daily transactions and transfer values.

• Transaction and transfer values skyrocketed to over $8 billion daily—a 200% leap compared to last month’s $2.6 billion average.
• This dramatic increase signals not just activity but a strong undercurrent of sustainability in Ether’s market position above $1,000.

Whales or Fishes? The Volume Game

Now, let’s delve into the intriguing habits of our whale friends. Increased withdrawals from exchanges can mean a variety of things—staking, yield farming, or simply moving assets to the safety of cold storage. Generally speaking, a consistent stream of net deposits hints at a short-term selling sentiment, while net withdrawals suggest accumulation, especially among large holders.

Between January 4 and January 11, exchanges witnessed net withdrawals of 460,000 ETH—definitely not your run-of-the-mill move! This could indicate that whales are consolidating their holdings, either moving to cold wallets or diving into the DeFi pool. Such behavior goes against the usual trend where large players tend to deposit as prices approach historical highs. Aside from a peculiar 100,000 ETH net deposit on January 10, the trend of net withdrawals has dominated since December 2020.