Chinese journalist and insider Colin Wu share his bullish opinion on some Ethereum (ETH) on-chain metrics. Here is why the ongoing trend remains positive despite a painful pullback.
Traders drain Ethereum (ETH) liquidity from exchanges
Mr. Wu noticed that, despite the price increase, the all-exchange liquidity indicator dropped to historical lows. The liquid supply avaliable on centralized exchanges has continued tanking since September 2020. In 2021, this process gained impressive traction.
When the Ethereum (ETH) price crossed the $1,900 mark for the first time, only 20 million Ethers (ETH) remained in exchanges' reserves. Thus, this indicator erased more than 20 percent in half a year.
Ether was brutally rejected by the $2,000 level. According to liquidation calculators, almost $340 million worth of long positions were liquidated in no time on Feb. 21, 2021.
Thus, this liquidation is the most ruthless since Ether entered the four-digit zone for the first time.
Fat cats keep ETH2 in mind
Meanwhile, there is a powerful catalyst for Ethereum (ETH) liquidity outflow. Mr. Wu claims that large holders increase their stake in Ethereum 2.0, expecting its next milestones.
As a result, he is confident that this rally is nowhere near its end:
The ETH market is facing a shortage of liquidity.
According to the latest statistics by ETH2 validators, 2.75 percent of the Ether supply is now staked in the Ethereum 2.0 deposit contract. Almost 100,000 validators deposited 3,160,066 ETH so far.
As covered by U.Today previously, the Ethereum community is concerned about the opportunities for centralized exchanges to control Ethereum 2.0 validators.