3 Reasons why Ethereum Price is Still on Track to top 2,000

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After dropping 27 over three days, Ether ETH price finally reached a bottom at 1,040 on Jan. 22. The sharp correction liquidated 600 billion worth of future contracts but interestingly, Ether price rebounded to a new alltime high even as Bitcoin price continues to trade in a slight downtrend.

According to Cointelegraph, the increasing TVL and transaction volumes of the decentralized finance sector are behind Ethers impressive surge. To determine whether the recent pump reflects a potential local top, well take a closer look at onchain flows and derivatives data.

Exchange withdrawals point to whale accumulation
Increasing withdrawals from exchanges can be caused by multiple factors, including staking, yield farming, and buyers sending coins to cold storage. Usually, a steady flow of net deposits indicate a willingness to sell in the shortterm. On the other hand, net withdrawals are generally related to periods of whale accumulation.

Futures were overbought
By measuring the expense gap between futures and the regular spot market, a trader can gauge the level of bullishness in the market. The 3month futures should usually trade with a 6 to 20 annualized premium basis versus regular spot exchanges. Whenever this indicator fades or turns negative, this is an alarming red flag. This situation is known as backwardation and indicates that the market is turning bearish. On the other hand, a sustainable basis above 20 signals excessive leverage from buyers, creating the…

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