After trading 10% below the price from last week, Ethereum was at the $2500 level. The price action was largely range-bound and depended on the liquidity and volatility across exchanges. Liquidity continued to remain low; 41% of ETH was concentrated in large investors’ wallets. The accumulation and wiping off of ETH balance from exchanges has supported a bullish narrative, however, it has influenced the liquidity. There is a drop in daily trade volume and this could be a key factor contributing to the rangebound nature of price action.

There are several metrics supporting a bullish narrative for Ethereum like the mean fees for Ethereum and Bitcoin. The mean fees has now returned to mid-2020 levels. This is bullish since this is the same level off of which the price rally started. Other factors like ETH OI showed signs of recovery.

ETH options Open interest and ETH options trade volume were relatively high compared to the past two weeks. At the same time, ETH’s rally is influencing that of altcoins. DeFi projects and L2 scaling solutions are rallying. There is increased investment inflow in altcoins since Bitcoin’s dominance remains at 41% level.

There are large exchange deposits being made, flooding exchanges with smaller altcoins. This is increasing the liquidity for these altcoins. Contrastingly with an increase in the volume of exchange deposits, the same may lead to a further drop in Ethereum’s price. In the event that ETH % balance on exchanges increases, a drop in price, to the $2000 level can be expected.

However, the dropping social volume and social media mentions along with on-chain metrics signaled a bullish price narrative for ETH. The price is more likely to cross the psychologically important level of $3000 before rallying higher, to the $3500 level. Besides large transactions on the network are up over 7%, which further supports the bullish narrative and the rally to $3000 before the weekend.