This fact makes Ethereum’s current rally different this way

This fact makes Ethereum’s current rally different this way

Bitcoin Ethereum Investment News
May 26, 2021 by J.D. Smith
9
Ethereum’s rally to $3000 has more volatility than observed last week. In the past 24 hours, the price was up over 9%. Despite this according to analysts, Ethereum continues to remain undervalued. With a high correlation with Bitcoin, Ethereum’s rally is expected to be a long and sustainable one this week. Bitcoin hit $40000 after
skew_eth_spot__aggregated_daily_volumes-1024x572-1

Ethereum’s rally to $3000 has more volatility than observed last week. In the past 24 hours, the price was up over 9%. Despite this according to analysts, Ethereum continues to remain undervalued. With a high correlation with Bitcoin, Ethereum’s rally is expected to be a long and sustainable one this week.

Bitcoin hit $40000 after recovering from last weekend’s drop and the rally continues with an increase of 8% in market capitalization. In the case of Ethereum, the market capitalization is up nearly 10%. The 24-hour trade volume has dropped and this could be indicative of dropping Ethereum reserves across exchanges.

Why ETH's rally is expected to be a sustainable one

ETH Spot Daily Volume || Source: Skew

Based on data from ETH, the daily spot volume has dropped after hitting a peak last week, however, it now ranges below $4 Billion consistently. Despite that, the price has recovered and the volatility is back, based on the price trend.

At the current price trend, 95% HODLers are profitable, this is up from 80% when the price was below at $2200 level. Additionally, the social volume is up 14% this week and the increase in social volume has had a direct impact on the price, resisting the selling pressure. The trend and the relationship between the social volume and price are evident from the following chart.

Why ETH's rally is expected to be a sustainable one

Source: Lunarcrush.com

The social volume hit a peak 3 times in a week, based on the above chart, the highest peak hit when the price was at the $2800 level. When compared to altcoins in the top 10, Ethereum has higher volatility and relatively high short-term ROI. This makes it lucrative for both long-term investors and retail traders. Besides, the increasing profitability of Ethereum HODLers is likely to change the HODLer composition and increase the % of HODLers holding on to Ethereum for over 12 months.

Ethereum has rallied several times this year since the beginning of 2021, however, this rally, a recovery from the dip is a sustainable once, since institutional demand has sustained. Grayscale’s ETH holdings are nearly at the same level, as they were when Ethereum’s price was at a peak of $4140 based on data from Bybt. The fact that institutional holdings have not tapered off, makes it likely that the current price rally will be a sustainable one.


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