Ethereum’s ‘Liquidity Crisis’ May Provide ETH’s New Record Before Bitcoin

Ethereum’s native token, Ether (ETH), can beat Bitcoin (BTC) in the race to reach new all-time highs, recent analysis reveals.

On a tweet on Wednesday, Ki Young Ju, CEO of on-chain analytics service CryptoQuant, highlighted a “seller-side liquidity crisis” for Ether that could give him an edge over BTC.

Ether liquidity deficit is “intensifying”

After Bitcoin rose nearly 40% from the $29,000 low, altcoins also started to wake up and Ether was no exception.

The market’s biggest altcoin has recaptured the $3,000 level, which this week is being tested again as support.

While all eyes are on Bitcoin, as the biggest cryptocurrency on the market is imminent to hit $50,000 again, optimism about Ether remains on the rise following the successful rollout of the London update earlier this month.

Thanks to changes in the token supply driven by the hard fork, a liquidity drop could serve to push the ETH/USD pair to new historical peaks before the BTC/USD pair manages to do the same.

“In the long run, $ETH may reach its all-time high before $BTC,” summarized Ki.

“The current price of $ETH is closer to the historic high compared to $BTC. Greater demand, lesser supply. The liquidity crisis on the seller’s side of $ETH is still intensifying, while the $BTC foreign exchange reserve halted its downward trend in May.”

BTC reservation at brokers. Source: CryptoQuant

In terms of numbers, Bitcoin bookings at brokerages have been declining since May, although there was a transient increase in late July. From a peak of 2.54 million on July 26, BTC reserves have dropped to 2.44 million this week.

In contrast, ETH has seen a nearly linear downward trend in the volume deposited with brokers since the high of 21.43 million at the end of May. This week, the balance was around 19.25 million.

ETH reservation at brokers. Source: CryptoQuant

Battle of available stocks

Ki is not alone in predicting a more unrestrained bull charge for Ether compared to Bitcoin.

Related: Important metric suggests new altseason is near

As reported by the Cointelegraph, Bloomberg Intelligence also highlighted the ETH, not the BTC, in a recent report, even predicting a “flippening” in the position of the largest cryptocurrency in the market.

Meanwhile, the data continues to show an ongoing supply shock in Bitcoin stocks as well – something that sets a historical precedent capable of triggering a rise in the price of BTC.

“The Gross Inventory Shock Index has been a reliable indicator in recent months”, commented analyst William Clemente III as he reflects on the latest figures released by on-chain data analytics firm Glassnode.

“Impulses in both directions resulted in price movements next. As the metric continues to slowly climb to levels prior to 58K BTC today, another big boost is expected.”

Bitcoin Stock Shock Chart. Source: William Clemente III/Twitter

The views and opinions expressed herein are those of the author alone and do not necessarily reflect the views of Every investment and trading move involves risk, you must conduct your own research when making a decision.


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