Ethereum (ETH) has marked an impressive milestone, peaking at $3,500 on February 29, boasting a substantial 56% monthly gain. With a dominating presence on price charts throughout February 2024, Ethereum has outperformed major rivals, including Bitcoin (BTC), Solana (SOL), and Cardano (ADA). Analysts predict another upswing towards the $4,000 mark in March 2024, citing key on-chain analysis and supply trends as indicators for potential bullish momentum.
One significant factor contributing to Ethereum’s stellar performance in February was the successful execution of the Dencun upgrade testnet and the escalating interest in ETH exchange-traded fund (ETF) filings. On-chain data trends now suggest that the aftermath of these events could pave the way for continued upward movement throughout Q1 2024.
An essential aspect of this optimistic outlook is the positive shift in Ethereum stakeholders’ preference for longer-term investment horizons and passive income yield over short-term profit-taking. CryptoQuant’s Exchange Reserves reveal a substantial drop in ETH held on exchanges, decreasing from 14,433,873 ETH on January 31 to 13,770,551 ETH on February 29. At current prices, this signifies a significant movement of $2.3 billion worth of ETH from trading wallets to long-term storage and staking contracts, creating a scarcity of available supply for spot market trading.
Ethereum’s diverse range of yield opportunities, such as the 4% APR passive income rewards from the beacon chain for whale investors and various high-yield DeFi staking protocols for retail investors, has incentivized holding over early profit-taking.
The surge in demand for liquidity staking derivatives and the expected improvement in transaction throughput following the Dencun upgrade on March 13 further contribute to the anticipated decline in ETH market supply.
The network’s robust performance in February is underscored by the addition of 1.84 million new users to the Ethereum network. Santiment’s metric tracking the number of funded wallets indicates a notable increase in Ethereum’s total holders to 115.5 million addresses, showcasing a deepening global retail adoption and a fresh influx of capital into the ecosystem.
While Ethereum must overcome a major resistance sell-wall at the $3,550 territory in the short term, analysts are optimistic about the potential for a surge towards $4,000 in March 2024. IntoTheBlock’s global in/out of money data aligns with this outlook, revealing a resistance sell-wall at $3,543 that, if surpassed, could fuel the rally.
Despite the potential for short-term resistance, the prevailing sentiment suggests Ethereum bears regaining control is unlikely, particularly with a substantial buy-wall at the $3,100 area where investors could make frantic purchases to avoid net-loss positions.
