ETH - Meh performance but not dead yet

Assets covered: ETH

Metrics used: Price, Social volume, Coin supply on exchanges, Holders Distribution


BTC's been making significant new ATHs every other week, ALTs have been making 5x,10x,20x since Jan, and yet.... ETH is just....struggling along.

Is ETH dead or just undervalued at the moment?

Let's take a quick look.


ETH vs other majors - Sanbase

ETH finally broke above $1900 today but.... when we compare its performance against BTC and other majors... it's nothing worth shouting about..

BTC: +160% from 2017 ATH

BNB: +433% from 2019 ATH

DOT: +420% since trading

ATOM: +260% from 2019 ATH

ETH: +31% from 2018 ATH

Given the current market conditions, ETH is severely underperforming against its peers, which begs the question, "Is it severely undervalued " or "Is the market punishing ETH for the high network fees that's making it increasing difficult for its users?"

Rightfully so, ETH eventually earned itself a meme.

The trading volume vs price lately is also showing some concerning divergences.

ETH Price Volume divergence - Sanbase

While ETH's price is going up, the volume is trending down, suggesting a lack of buyers/interest.

If trading volume doesn't pick up soon, it's not going to look that good for ETH.

Social volume

ETH social volume - Sanbase

Even though ETH finally broke the $1900 level and made a new ATH, social volume remains considerably low when compared with previous breakouts. Also note that since 3rd Feb, the social volume been on a decline, lower lows as price continues to chug upwards.

Perhaps the crowd is just not that excited about ETH any more. This lack of interest is generally good as the crowd tends to come in right at the local top. As long as price is able to stablize with low social volume, it's a nice setup.

So....who's buying ETH?

For one, the crowd seems relatively uninterested in ETH so it's unlikely them.

Holder distribution data suggests that it's likely that OTC deals are happening in the background involving larger sized purchases as the number of whale addresses (holding 10k+ $ETH) ballooned to 1,287 on Valentine's Day.

A look at what Grayscale is doing also suggests that they are still accumulating ETH.

Grayscale added 20095 ETH - Bybt
Grayscale ETH holdings - Bybt

They have been increasing their holdings since the start of Feb 2021 and added another 20095 ETH ($37.9M USD) today, bringing their total ETH holdings to 3.15M ETH.

Perhaps most of the action is indeed happening beyond the crowd. It's good to see that institutions are accumulating ETH.

Coin supply on exchanges

ETH coin supply on exchanges - Sanbase

ETH's coin supply on exchanges been on a downward trend since 13th August 2020. This is a great sign as there's less sell pressure on the market.

Interestingly, if we compare with the previous bullmarket of 2017, we can observe similar drop in Coin supply on exchanges against the Price action.

Could we be in that very part of the 2017 bullmarket cycle (as indicated on the image)?

If so, it's encouraging to see that there's still a major run that ETH could do (and it should, given the under performance) some time this year. But... not before a correction on this leg if history rhymes.

If we are going by this chart then perhaps we might be topping out soon but not before one nice blow off top pump for the road, to get ready for the end game.

Going forward

It's a mixed bag with ETH, there's some concerning signs suggesting a local top might be in soon. But on the flip side, institutions are still accumulating and coin supply on exchanges is dropping.

Onchain metrics suggests a healthy network (albeit the high fees) activity and price is just not reflecting it properly. In the near term, a local top out is likely, but if history rhymes, we should see a nice run up sometime later this year.

Thanks for reading!

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