Ethereum: Yearly TVL high could boost ETH, but risks persist

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  • Ethereum recently hit its highest Total Value Locked (TVL) of the year, reflecting increased activity.
  • Despite this milestone, bullish sentiment was tempered by ongoing concerns over negative netflows.

As a seasoned analyst with years of market observation under my belt, I find myself intrigued by Ethereum’s recent performance. The network has hit its highest Total Value Locked (TVL) this year, indicating increased activity and growing investor confidence. However, the ongoing concerns over negative netflows serve as a potential roadblock to sustained growth.

Over the past month, Ethereum [ETH] has surged by approximately 48.39%. However, its rapid ascent seems to be tapering off recently. In the last week alone, its price escalated by around 9.0%, but in the most recent 24 hours, it saw a more modest growth of 0.36%.

This dip in buyer activity suggests some hesitation among investors compared to earlier surges.

According to AMBCrypto’s analysis, there may be an upcoming surge in ETH prices. However, it must first tackle its issue of negative netflow to maintain a strong and lasting price increase. Overcoming these obstacles could pave the way for even greater growth.

Investor confidence in ETH grows

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Recent data from DeFiLlama showed a significant surge in Ethereum’s Total Value Locked (TVL), which has climbed to $71.575 billion. This marks its highest level this year and a peak last seen in 2022.

TVL measures the total value of assets locked, staked, or deposited into protocols on a blockchain. In Ethereum’s case, it serves as a key indicator of the network’s health.

A substantial Total Value Locked (TVL) indicates a high level of trust and confidence in the market, as it shows that users are actively pouring their investments into the platform’s ecosystem.

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This increase in Total Value Locked (TVL) suggests a more robust market and escalating investor curiosity towards Ethereum. Typically, such trends lead to an increased desire for the asset, possibly pushing its value even higher.

Renewed optimism

Ethereum has seen consistent support from derivatives traders, with positive funding activity.

Currently, when I’m writing this, Ethereum’s (ETH) funding rate for November is noticeably greater compared to other recent months, indicating a consistent expansion that hasn’t been observed during the preceding four months.

The Funding Rate signifies recurring payments exchanged among traders, serving to adjust the cost of future contracts to match the current market price (the spot market).

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At the current moment, the Funding Rate for ETH stands at 0.0235, meaning short traders are compensating long traders to maintain balance. Typically, this scenario can be interpreted as a bullish sign, indicating potential price increases ahead due to the perceived upward momentum.

Furthermore, it was observed that the Buy-Sell Ratio, a metric indicating the equilibrium between buying and selling activity, suggested that buyers were increasingly gaining dominance in the Ethereum market.

In the last day, the ratio has increased to approximately 0.984, suggesting a resurgence of interest in Ethereum and potentially forecasting price growth.

If the Funding Rate and the Take Buy Sell Ratio consistently rise, it’s probable that Ethereum’s price will also increase, supporting a positive outlook or optimism among traders.

Delayed rally likely as outflows surge

Currently, there’s been a significant outflow of Ether on the Ethereum network, amounting to approximately $96.4 million over the past day.

Read Ethereum’s [ETH] Price Prediction 2024–2025

As someone who has been actively involved in the world of cryptocurrencies for several years now, I have come to understand that a significant imbalance between outflows and inflows on a blockchain can be a clear indication of a notable withdrawal of funds from the network. This phenomenon, which occurs when more liquidity leaves the system than enters it, is something I’ve noticed during periods of market uncertainty or panic selling. It’s an essential aspect to keep in mind for anyone looking to navigate this dynamic and ever-evolving landscape.

If the current trend persists through the upcoming week, the projected surge in ETH’s value might encounter notable setbacks. Rather than a substantial increase in price, the asset could see a slowdown or even a possible drop.

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2024-12-01 20:07