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On December 17, Ether (ETH) price soared to $ 677, its highest level since May 2018, and it appears that the highest altcoin’s price was driven by Bitcoin’s (BTC) rapid move above USD 21,000. It is also possible that the CME’s ETH Futures Launch announcement also played a part.

Solid fundamentals and a positive news flow also appear to be helping Ether hold above USD 640 for the past few days, and despite the current dump, these fundamentals persist. Eth2 stakeouts surpassed $ 1 billion locked in total value, showing that major players are committed to the long term as it is currently not possible to exchange these tokens.

To understand whether the recent pump reflects a temporary excitement or possibly a new price level, one has to measure the usage statistics on the Ethereum network.

An excellent place to start is to analyze transactions and transfer value.

ETH / USD price versus trades and transfers. Source: DigitalAssetsData

The chart above shows how strongly the indicator rebounded after a brief decline on December 15. The continued level above $ 2 billion daily transactions and wire transfers indicates a healthy improvement over the previous two months.

Therefore, the move to $ 640 was in line with Ethereum’s blockchain activity.

Payouts on the exchange have resumed

Increasing withdrawals from exchanges can be for a variety of reasons including staking, crop farming, and buyers sending coins to cold storage. Usually, a steady stream of net deposits indicates a willingness to sell in the short term.

ETH / USD price (red) vs. net flow exchanges. Source: Nansen & CoinMarketCap

Between December 16 and 18, there were 232,000 deposits of Ether on the exchanges, a trend that lasted 14 days. During those two weeks, withdrawals exceeded deposits by 470,000. This shows that there was selling pressure when the price of Ether passed $ 600.

It’s worth noting that December 19 marked a net take-up of 293,000 Ether, the largest outflow since October 14. Thus, the initial move of investors rushing to make a profit in excess of $ 600 could have disappeared.

While it is too early to determine whether a second wave of deposit will occur in the exchanges, so far the indicator shows that traders are willing to accumulate at current price levels.

Futures premium spiked but has since normalized

Professional traders tend to dominate longer-term futures contracts with fixed expiration dates. By measuring the cost gap between futures and the regular spot market, a trader can measure the level of optimism in the market.

The three-month futures are typically traded at a premium of 1.5% or higher over regular spot exchanges. Anytime this indicator fades or goes negative, it’s an alarming red flag. This situation is known as “backwardation” and indicates that the market is turning bearish.

March 2021 ETH futures premium. Source: Digital Assets data

The chart above shows that the indicator peaked at 5.8% on December 19, but later adjusted to 5% as Ether stabilized near USD 650. Sustained levels above 3.5% indicate optimism, although far of excessive.

Still, the current rate of more than 4% equals an annual premium of 17% and is significantly higher than the level of previous months. This shows that despite the weakness on December 19, professional traders are still confident in Ether’s bullish potential.