Before Bitcoin’s sudden and unexpected bull run, Ethereum (ETH) was the biggest winner of 2020 with more than 300% in year-to-date returns and also showcasing a strong foundation with an increase in adoption, following DeFi’s rise initially and then the Ethereum 2.0 launch with Phase 0 in November. As Bitcoin goes through a consolidation phase, Ether is having a field day as it recorded a new all-time-high at $1,467 on January 25 according to statistics from CoinMarketCap, officially bringing ETH past its previous historical high.
Ether’s performance has been solid in the past year, and as the spotlight was cast on Bitcoin, ETH received some attention over the same period as well despite being slightly overshadowed. This year may very well be ETH’s year, and it is off to a good start as we approach the end of January.
According to data from analytics firm Glassnode, the total ETH balance being kept on exchanges right now have reached a yearly low as seen in the graph below. The last time ETH balances hit this low point was back in November 2019, and this indicates that available ETH supply is running low, which may well drive up its prices even further in the short term.
Where has the ETH gone? Analysts say investors have shifted their funds off exchanges to channel it towards DeFi protocols and also staking on the Ethereum 2.0 deposit contract. DeFi tokens have experienced a surge this week as well, with Aave (AAVE) and Chainlink (LINK) hitting new ceilings as investors are taking interest in the sector again.
ETH2’s beacon chain was launched in November 2020, and the ETH staked on the upgraded network is steadily increasing month by month. As the ETH2 team works on the next phases of the upgrade to bring greater scalability to the world’s most popular blockchain network, sustained inflows of ETH are to be expected.
