Bitcoin and Ethereum are being withdrawn from exchanges in large amounts. In light of that trend, on-chain analysts suggest that the prices of both cryptocurrencies could rise higher.Visible Signs of a Bubble
In a bullish phase, the market runs hot and cools down in cycles. Altcoin prices rise and enter a bubble-like market. Traders recognize tops and correction cycles, each time forming higher highs and lows.
Eventually, the market runs out of steam, and the local top becomes a generational top. During this upthrust, liquidity flows towards altcoins, causing abnormal gains with a lack of fundamentals.
These are returning signs of a bubble as altcoins exhibit irrational exuberance. For instance, yesterday, the Stellar blockchain went down for a brief period, but its native token XLM held onto the previous day’s gains of 25%. Meanwhile, XRP has reached $1 despite its pending securities case filed by the SEC.
Still, on-chain analysis of the top two cryptocurrencies—Bitcoin and Ethereum—suggests that the market has not yet reached its top.Ethereum Liquidity Crisis
Benjamin Lilly of on-chain research firm Jarvis Labs mapped the correlation between reducing exchange supply and ETH price. According to Lilly, ETH “is gearing up for a historic run.”
He found that in 2017 exchanges saw 44% lesser Ethereum balances, and users withdrew ETH to personal wallets. This time around, exchanges have witnessed a 25% reduction in supply. Moreover, the total ETH supply is 38% more than the last time, representing larger overall supply-side liquidity.Ether supply moved off exchanges. Source: Jarvis Labs
Furthermore, exchanges a...