Ethereum price may be preparing for a significant price hike similar to Bitcoin. The rapidly decreasing liquid supply in the stock markets shows this.
Ethereum in stock markets falling
The latest data show that the number of Ethereum stored on exchanges has gradually decreased over the past year, and has also declined significantly in the last 24 hours. This leads to speculation if the rising demand for ETH and decreasing liquid supply spike the asset price.
According to the cryptocurrency tracking resource CryptoQuant, the number of ETH tokens stored on exchanges reached a 12-month high by over 14 million in mid-2020.
After falling below 11.5 million in the following months, the liquid supply has decreased significantly in the last 24 hours. As the chart above shows, it fell about 10% to 10.2 million.
Popular cryptocurrency commentator Alex Sanders called this development “unbelievable” and cited a possible upward scenario for the asset’s price, referring to a similar situation with Bitcoin.
If it happens like Bitcoin, ETH price can walk to $ 4 thousand
The basic economic principles state that when the supply of an asset decreases, demand remains the same or increases, its price should in theory increase.
As previously reported, while BTC’s liquid supply has also declined, its price has recently climbed to all-time highs. Saunders highlighted this, saying, “When demand exceeded BTC supply, it quadrupled in 90 days.”
If ETH is going to resemble the move of Bitcoin, and indeed quadruple, that means a $ 4,000 price tag.
Data from Glassnode supports the aforementioned statement that the supply of ETH is decreasing. More specifically, the firm’s active supply – that is, the amount of cryptocurrencies in circulation – last moved one to two years ago.
This metric reveals a HODLing mindset from such investors as it dropped to 15.6 million tokens, a 3-year low.
Separately, the firm stated that the actual price of the token broke a new record, unlike the actual price of ETH, which failed to reach a new all-time high of over $ 1,450.
The actual price of an asset takes into account the average price at which each cryptocurrency last moved on the network.
Glassnode said the actual price of ETH continues to set new records, with the most recent surpassing $ 420.