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In terms of exchange volume, Ethereum, along with many of the market’s altcoins, has done admirably in 2021. The coin momentarily breached the prized $2,000-price range a month ago, but it quickly retraced as the coin was unable to hold that spot.
Although price spikes have been numerous, they have also shown how closely linked altcoins, such as Ethereum, are to Bitcoin’s price activity. However, amid ETH’s standing as the world’s leading altcoin and the second-largest cryptocurrency, is the coin poised to regain the $2k mark?
Interestingly, for ETH, there are quite a few bullish signs. In fact, past precedents have shown that even the most bullish on-chain data can falter and not mean much thanks to its correlation with Bitcoin. Bitcoin’s bull rally has had a positive impact on coins like ETH and given the fact that the bull run is just around the mid-way mark, where exactly does that leave ETH with regards to its price aspirations?
Looking at market data presented by CryptoQuant, it is clear that ETH in exchange reserves has been decreasing since July 2020. This has only grown worse when the bull market has accelerated, with currency reserves plummeting precipitously.At the time of publishing, ETH in exchange wallets had reached a 2-year low, demonstrating how most traders are confident in the asset’s long-term prospects. This observation strengthens the hodler sentiment for ETH, making it more prone to abrupt sell-offs.
Furthermore, Ethereum’s blockchain has seen consistent growth. Although developer operation isn’t necessarily responsible for price spikes, the fact that a healthy amount of growth is still taking place on its network is still a good sign for its investors and traders, and it substantiates consumer trust in the altcoin.
Indeed, Santiment data highlighted this, as well as the fact that ETH isn’t the only altcoin that has seen increased developer activity.
Furthermore, there has been a rise in the volume of ETH staked on ETH 2.0. At the time of publishing, there were approximately 3.5 million ETH staked, which, when combined with the large amount of ETH left in cold storage, provides a good argument for ETH to experience a strong uptrend. One might also argue that the altcoin has what it takes this time to see its market price rise without the support of Bitcoin.
However, the high association with Bitcoin remains a restricting factor, and it has continued to rise over the last three months, as predicted. Indeed, according to CoinMetrics’ table, the BTC-ETH connection reached a 3-month peak at the beginning of the month. Although previous precedents show that ETH has marched in lockstep with BTC on the majority of occasions, traders have cause to believe in separate spikes in the coming months due to ETH’s holders and bustling network.