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Ethereum has been continuously removed from markets over the last few months. Since 2020, outflows have been large, and the market has regarded the situation as highly bullish. Although it has certain promising aspects, the true seriousness of the case has not been adequately explained. Moving Ethereum out of exchanges may play a significant role in 2021, and other tokens may profit greatly as a result, as explained below.
What happened during the 2017 bull run?
Everyone in the crypto space is familiar with the bull run of 2017. Bitcoin smashed an unimaginable ceiling on $20,000 and the rest of the market followed. Ethereum was one of them, reaching a $1400 peak in 2017. Now, many considered the 2017 rally to be a bubble, but certain fundamentals unfolded back then as well.
Mirroring a reflection of the current market movement, between March 2017 and January 2018 peak, close to 9.8 million Ethereum had flown off exchanges, estimated to be more than 40% of the exchange reserve. After Ethereum’s price started to drop in 2018, exchange inflows started to pick up pace.
At the moment, equivalent to 7 million ETH has been spent between August 2020 and April 2021, representing a 30 percent decrease in currency balance. In terms of the bull market, Ethereum’s valuation has steadily increased over the last four months, but there might still be demand for more.
Is Ethereum also running the risk of a 2017 crash?
While a logical concern regarding exchange outflows was expressed back in 2017 as well, the main difference lies in where these ETH is going into in 2021. In 2017, Ethereum was possibly moved into cold wallets from exchanges.
Today, Ethereum’s liquid supply is being depleted when it becomes entangled in DeFi protocols. 11 million ETH are reportedly bottled up, according to defipulse. Furthermore, Ether staking was not a viable choice in 2017, and presently, 3.8 million ETH worth $8.47 billion is invested on ETH2 Contracts.
The liquidity crisis on exchange is causing realistic application advancement, with progress becoming significantly more visible than during the 2017 rally. There is an additional advantage of institutional participation as well as rising demand, and with currency liquidity exhausted, demand can only skyrocket as retail joins the market for the rally.
For Altcoins; Win-Win?
Back in March, we published an article titled the Livermore accumulation map, which suggested a long-term pattern emerging on the ETH/BTC chart.
The accumulation cycle’s phase 7 was depicted during the first week of March, and the final leap into phase 8 has started in the last few weeks. Given that ETH/BTC is capable of breaking through the cylinder, ETH/BTC can soar through the charts at breakneck pace. The capital transfer into Ethereum will be massive, and it will also begin to flow into the altcoin market.