Crypto Analysis: Ethereum (ETH) Poised for Potential Surge to $3,000 as On-Chain Activity and Derivatives Trading Signal Bullish Momentum

Crypto Analysis: Ethereum (ETH) Poised for Potential Surge to $3,000 as On-Chain Activity and Derivatives Trading Signal Bullish Momentum

Crypto News – On Thursday, Ethereum (ETH) surged to $1,950, with bullish forces pushing it closer to the key $2,000 resistance level. An analysis of on-chain data reveals the primary drivers behind the recent upswing in ETH’s price.

Will ETH Break Towards $3,000 or Face a Bearish Reversal?

This week’s on-chain activity among Ethereum holders suggests that many investors have their sights set on even more substantial gains. The pressing question on everyone’s mind is whether ETH will continue its upward trajectory towards $3,000 or potentially face a bearish reversal.

Ethereum Holders Shift 263,520 ETH into Long-Term Storage

Following a brief consolidation period at the beginning of the month, ETH’s price broke through the $1,900 resistance on November 9th. On-chain data indicates that Ethereum holders transferring their assets into long-term storage this week played a pivotal role in the price surge.

Data from IntoTheBlock reveals that ETH exchange netflows remained negative over the past seven days. A closer examination of the chart underscores that between November 3rd and November 9th, investors moved 263,520 ETH from crypto exchange wallets into long-term storage.

Exchange netflows offer a daily snapshot of the difference between total outflows and new inflows into crypto exchange wallets. A negative netflow value suggests that investors are withdrawing more coins from exchanges and choosing self-custody, signaling their intention to ‘HODL’ their ETH assets rather than pursue short-term profit opportunities on exchanges.

At the current price of $1,920, these outflows, totaling 263,520 ETH, represent approximately $505 million. Clearly, this significant reduction in the number of ETH coins available for trading on exchange spot markets has had a positive impact on Ethereum’s price this week.

If this trend persists and market demand remains steady, ETH’s price is likely to break through the $2,000 resistance.

Derivatives Traders Inject $1.2 Billion into Ethereum in the Past Month

Another major catalyst behind this week’s ETH price rally is bullish trading activity among crypto derivatives traders. According to data from the crypto trading analytics platform Coinalyze, Ethereum futures markets have experienced a noticeable influx of fresh capital over the last 30 days.

The chart below illustrates that ETH’s open interest was at $4.20 billion on October 8th. By November 9th, this figure had surged to $5.42 billion, signifying an inflow of $1.22 billion in fresh investments within the past month.

In the context of derivatives trading, open interest represents the total number of outstanding or unsettled contracts for a particular asset, including both long and short positions. A rise in open interest typically indicates new market participants and increased capital inflows. When investors continue to inject fresh capital during a market rally, it reflects their confidence in the asset’s short-term price prospects.

Therefore, the $1.22 billion increase in ETH open interest over the past month serves as a key indicator that investors remain optimistic about the current price trend.

If this scenario continues, Ethereum holders and spot market traders can anticipate further upside potential in the coming days.

ETH Price Prediction: Journey Towards $3,000?

From an on-chain perspective, the substantial decrease in exchange supply and the rising open interest signal clear bullish indicators. With these metrics still on an upward trajectory, Ethereum appears poised to extend its gains toward $3,000.

The Global In/Out of the Money (GIOM) data, which categorizes current Ethereum holders based on their entry prices, supports this bullish prediction. However, it also highlights that ETH must first overcome the initial resistance at $2,100 for bulls to have confidence in reclaiming $3,000.

As illustrated below, 6.37 million holders had purchased 38.3 million ETH at an average price of $2,165. If these holders decide to close their positions prematurely, it could potentially slow down the Ethereum price rally.

Nonetheless, if the bulls manage to surmount this obstacle, ETH’s price is likely to inch closer to the $3,000 mark as predicted.

On the other hand, bearish sentiment could prevail if the Ethereum price dips below $1,700. However, it’s worth noting that 4.99 million ETH holders had acquired 10.58 million ETH at the minimum price of $1,800. If the supply on exchanges continues to dwindle, this support level is likely to remain robust. But if that support were to crumble, it could lead to a retracement in ETH’s price below $1,700.