Ethereum On-chain Metrics and Options Are Flashing Bullish Signals, According to Coin Bureau

The pseudonymous host of Coin Bureau deeps dive on Ethereum (ETH) metrics and makes predictions on ETH upside potentials.

ETH 2.0 Incoming

The long-awaited update ETH 2.0 will transition Ethereum away from Proof of Work (PoW) to Proof of Stake (PoS).

According to the trader, the ETH 2.0 roadmap has it going through three stages. The network has already been through phase zero with the beacon chain. However, the next stage is phase one which is the Proof of Stake (PoS) merge. It’s at this stage that we will move to Proof of Stake (PoS).

“When Ethereum progresses to ETH 2.0, then it is likely that the burn rate will exceed the block rewards. This will mean that Ethereum becomes a deflationary asset and “ultrasound” money,”

He adds:

“When you have an asset that is falling in supply year on year, it makes it rarer and hence more desirable.”

Bullish Onchain

As Coin Bureau says, there has been a massive fall in the amount of ETH that is held on exchanges. This is bullish as it means that this ETH will not be sold anytime soon.

“Ever since the beginning of the year, the amount of ETH held in exchange addresses has been on the decline. We went from just over 19 million on exchanges to below 16 million today. That’s over nine billion dollars in ETH that have been removed from order books.”

Coin Bureau suggests that this ETH has either been locked in smart contracts to be used in Defi or it has been sent to the ETH 2.0 deposit contract. Funds that are locked in these smart contracts are unlikely to be sold anytime soon.

Institutional Demand

Large Wall Street institutions are bullish on ETH. According to the trader, Goldman Sachs has said that there is a high likelihood that it will overtake Bitcoin which as a dominant store of value.

In the Coinbase institutional H1 report, ETH trading volume has literally skyrocketed. Last year, volume was at $92 billion. This year it was $1.4 trillion.

There was the same trend in the Genesis trading report from their OTC desk. Bitcoin trading volume has fallen from over 80% at the end of Q2 last year to roughly 47% of trading volume in Q2 of this year. ETH volume was less than 5% of Genesis’ trading volume last year whereas this year it was up to 25% of Q2 volumes.

ETH Options Bullish

When it comes to pricing assets in the future, the analyst recommends taking a look at what is going on in the options markets.

After the London hard fork went live last week, ETH options activity picked up quite a bit. This volume was mostly in call options which are a bullish sign.

He points out that it’s not just the type of options that were being sold that was interesting about this market flow, but it’s also the strike prices of these options. The most popular options were those that expired in March of next year with strikes of 50k and 40k.

One more thing that the crypto KOL suggests looking at is the price that investors are willing to pay for Calls relative to Puts. The 25 Delta skew has been on a sustained decline which shows that people were increasingly more willing to buy CALLs – bullish.