- Ethereum recently reached its highest Total Value Locked (TVL) of the year, reflecting increased activity.
- Despite this milestone, bullish sentiment was tempered by lingering concerns about negative net flows.
Ethereum [ETH] is up 48.39% over the past month, but the upward momentum has waned. Over the past week, the price rose 9.0%, with a smaller increase of 0.36% in the last 24 hours.
This drop in buyer activity signals some hesitation among investors compared to previous increases.
Analysis from AMBCrypto points to a potential rally, but ETH will need to address its negative net flow issues to support any significant price movement. Overcoming these challenges could pave the way for further gains.
Investor confidence in ETH is growing
Recently facts from DeFiLlama showed a significant increase in Ethereum’s Total Value Locked (TVL), which rose to $71.575 billion. This is the highest level this year and a peak last seen in 2022.
Source: DeFilLama
TVL measures the total value of assets locked, staked or deposited in protocols on a blockchain. In the case of Ethereum, it serves as an important indicator of the health of the network.
A strong TVL indicates high market confidence, with participants actively investing in the ecosystem.
This increase in TVL indicates a stronger market and growing investor interest in Ethereum. Such developments often translate into increased demand for the asset, potentially driving its price further upward.
Renewed optimism
Ethereum has received consistent support from derivatives traders, with positive funding activity.
At the time of writing, ETH’s funding rate in November was higher than in previous months, showing steady growth not seen in the past four months.
Source: Cryptoquant
The funding rate represents periodic payments between traders to align the price of futures contracts with the spot market.
A positive funding rate of 0.0235 at the time of writing for ETH indicates that long traders are paying to bridge the gap. This is often a bullish signal, indicating upward momentum.
Furthermore, the Take Buy Sell Ratio, which measures the balance between buyer and seller volumes, showed that buyers were gradually regaining control of the ETH market.
Over the past 24 hours, the ratio has risen to 0.984, indicating renewed interest in ETH and hinting at potential price gains.
If both the Funding Rate and the Take Buy Sell Ratio continue to rise, the price of ETH is likely to follow suit, reinforcing the bullish sentiment in the market.
Delayed rally likely as outflows increase
At the time of writing, Ethereum has recorded high net flows, with $96.4 million worth of ETH withdrawn from the network in the last 24 hours.
Read Ethereum’s [ETH] Price forecast 2024–2025
This happens when the outflow of liquidity from the blockchain exceeds the inflow. In this case, the sharp disparity in favor of outflows reflects a notable withdrawal of resources from the network.
Source: Artermis
If this trend continues this week, the expected rally for ETH could be significantly delayed. Instead of a big upward price move, the asset may stagnate or even experience a potential decline.