There are several metrics supporting a bullish narrative for Ethereum like the mean fees for Ethereum and Bitcoin. The mean fees has now returned to mid-2020 levels. This is bullish since this is the same level off of which the price rally started. Other factors like ETH OI showed signs of recovery.
ETH options Open interest and ETH options trade volume were relatively high compared to the past two weeks. At the same time, ETH’s rally is influencing that of altcoins. DeFi projects and L2 scaling solutions are rallying. There is increased investment inflow in altcoins since Bitcoin’s dominance remains at 41% level.
There are large exchange deposits being made, flooding exchanges with smaller altcoins. This is increasing the liquidity for these altcoins. Contrastingly with an increase in the volume of exchange deposits, the same may lead to a further drop in Ethereum’s price. In the event that ETH % balance on exchanges increases, a drop in price, to the $2000 level can be expected.
However, the dropping social volume and social media mentions along with on-chain metrics signaled a bullish price narrative for ETH. The price is more likely to cross the psychologically important level of $3000 before rallying higher, to the $3500 level. Besides large transactions on the network are up over 7%, which further supports the bullish narrative and the rally to $3000 before the weekend.