As Bitcoin shows bearish signs, on-chain activity suggests Ethereum could be on the way to reach its all-time-high before BTC.
Ethereum To Reach Its All-Time-High Price Earlier Than Bitcoin?
As pointed out by CryptoQuant CEO Ki Young Ju in a post, indicators could suggest ETH will reach its ATH quicker than BTC in the long term.
The exchange netflow is an indicator that depends on two metrics: the inflow and the outflow. The former is the total amount of the asset moving from personal wallets to exchanges.
While the latter is just the opposite; it’s the total amount of Ethereum (or Bitcoin) exiting exchange wallets. When the value of the inflow goes up, it means more crypto is being sent to exchanges for selling or altcoin purchasing purposes.
On the other hand, when the outflow indicator shows an uptick, it implies more investors are interested in hodling their coins, or perhaps selling them through OTC deals.
The netflow metric for Bitcoin or Ethereum is just the difference of the above two indicators. A positive value shows inflows are overwhelming outflows, thus possibly indicating that there is a selling pressure in the market.
Similarly, a negative netflow value may imply there is a buying pressure in the market as the outflows are more than the inflows.
Now, here is how the 30-day moving average (MA) netflow looks like for Ethereum over the the past year:
As the above graph displays, ETH has seen many big negative spikes recently. This means there is a buying pressure in the market as many investors are withdrawing their crypto from exchanges and storing in personal wallets.
This shows that due to the high demand and low supply, the ETH sell-side liquidity crisis continues to intensify. Such an environment could help drive the price up long term.
BTC, however, doesn’t look to be as fortunate. The exchange reserves, an indicator that shows the total amount of coins in exchange wallets, stopped the downtrend back in May. This means exchanges are still receiving a significant amount of coins for selling purposes.
On top of that, the current price of ETH is closer to the ATH than BTC’s. So, looking at the bigger picture, Ethereum may reach its ATH faster than Bitcoin in the long term.
At the time of writing, Ethereum’s price floats around $3k, down almost 6% in the last 7 days. The below chart helps showcase the trends in the price of the cryptocurrency over the past three months: