TL;DR
- ethereum's recent price surge coincides with a shift toward self-custody and an anticipated blockchain upgrade.
- eth's valuation could also be positively affected by regulatory developments, among other reasons.
Abandoning exchanges
The price of ethereum (eth) has risen significantly in recent weeks, recently surpassing the $3,000 milestone for the first time since spring 2022. Some on-chain metrics suggest the asset could be poised for a new rally.
According to CryptoQuant data, ethereum net exchange flow has been predominantly negative over the past month. eth/chart/exchange-flows/exchange-netflow-total?exchange=all_exchange&window=DAY&sma=0&ema=0&priceScale=log&metricScale=linear&chartStyle=column” target=”_blank” rel=”noopener” data-wpel-link=”external”>tracing massive red candles in the last few days.
The shift from centralized platforms to self-custody methods is considered optimistic as it could signal investors' long-term commitment to holding onto their reserves. It also reduces immediate sales pressure.
That trend could spur innovation in services that make self-custody more accessible to a broader audience, which could attract new users and encourage existing investors to increase their exposure.
The next updates
Another factor that hints that the price of eth could rise even further in the near future is proximity. Dencun update. Set to take place in March, it focuses on increasing the efficiency, scalability and security of the ethereum blockchain, making it more competitive against rival networks such as Solana.
Vitalik Buterin described the update as a considerable development for his creation and the Layer-2s associated with it.
Dencun marks the beginning of “The Surge” era on ethereum's roadmap, a process that follows the historic transition of the Proof-of-Work to Proof-of-Stake consensus algorithm, known as “The fusion”.
the integration of dress trees on the ethereum blockchain is also highly anticipated. It is expected to reduce disk space requirements, improve the functionality of staking nodes, and improve the overall user experience.
A possible eth ETF
bitcoin took center stage earlier this year when the US Securities and Exchange Commission (SEC) finally gave the go-ahead to numerous btc spot ETFs (including BlackRock's application).
The products allow people to gain exposure to the major cryptocurrency through a regulated financial company without having to purchase it directly. For their part, btc ETF providers need to purchase quantities of the asset to back the shares they offer to investors.
The price of bitcoin surpassed the $50,000 mark weeks after the approval. However, its real rise seems to have begun around the time BlackRock presented its intentions to jump on the bandwagon, thus generating quite a stir among industry participants. The price of btc has skyrocketed by 100% since the company joined the race.
Some might argue that eth is currently in that accumulation zone, with more room to grow. On the other hand, the possible approval of an ethereum spot ETF could lead to the same immediate “selling the news” event seen after the btc ETF approvals.
BlackRock, Franklin Templeton, Grayscale and others are among the financial giants that have come forward to launch such a product. Those willing to delve deeper into the matter can watch our dedicated video below:
The btc Halving
Last but not least, we will focus on bitcoin halving scheduled for April of this year. The event occurs approximately every four years and halves miners' block rewards. It reduces the speed at which new btc is minted, potentially making them more valuable if the economic fundamentals of supply and demand are followed (in theory).
Historically, the halving has been followed by a btc bull run, which has positively impacted the entire market. The price of ethereum reached an all-time high of over $4,800 a year and a half after the last such event. Its peak also coincided with btc's ATH of nearly $70,000.
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