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Ethereum Showing Massive On-Chain Growth Amid Rally to New All-Time High: Glassnode

Ethereum

dailyhodl.com 05 May 2021 07:43, UTC
  
Reading time: ~2 m

Blockchain analytics firm Glassnode says that activity on the Ethereum network is surging amid the second-largest crypto asset by market cap breaking staggering all-time highs above $3,500.

In its weekly report, Glassnode reveals that ETH holders are actively moving their coins from centralized exchanges and holding them in their own wallets, suggesting that a supply crunch could be driving Ethereum’s massive rallies.

“This week a relatively large volume of ETH was removed from known exchange wallets, spiking to over 200k ETH in a single day. The chart below demonstrates that in 2021, there have been 10 such occurrences with withdrawals of over 200k ETH/day. This compares to only two days with exchange inflows over 200k ETH per day indicating a general preference for self-custody of funds.”

The report says that exchanges now hold only 12% of the total ETH supply, while smart contracts have 22.8%, indicating soaring interest in the decentralized finance (DeFi) space.

“The almost equal and opposite trend for these curves demonstrates a clear product market fit and demand for DeFi by ETH holders.”

Source: Glassnode

Glassnode says Ethereum is also seeing higher throughput since Ethereum miners adjusted the block gas limit to 15M, leading to a drop in gas prices and therefore an increase in transaction volumes.

“The overall throughput of the Ethereum chain has reached a new all-time-high this week of 16.5 transactions per second. The prior all-time-high of 13.5 TPS was set at the peak of the 2017 bull run which has since been eclipsed for the majority of 2021.”

Source: Glassnode

The report adds that the spike in activities is lowering the Ethereum NVT Ratio (Network Value to Transactions Ratio), a measure of the network’s market cap against the volume of US dollar transmitted on-chain. A downward trend is typically viewed as a bullish indicator for the network.

“The chart below demonstrates an Ethereum NVT trending strongly downwards since Jan 2020, especially since the sell-off in March 2020. Recent high transaction throughput has also driven the NVT Ratio lower over the past few weeks, suggesting support for the recent constructive price action.”

Source: Glassnode


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