In a tweet on Aug. 18, Ki Young Ju, CEO of on-chain analytics service CryptoQuant, highlighted a “sell-side liquidity crisis” which could yet give ETH the edge over BTC.
Ethereum liquidity shortfall “intensifying”
With Bitcoin up over 50% versus its lows of $29,000, altcoins have also begun to reawaken, with Ethereum no exception.
The largest altcoin has recaptured $3,000, a level which this week is now in the process of being retested as support.
Despite attention focusing on Bitcoin reclaiming $50,000, optimism over Ethereum remains high after its successful London hard fork deployment earlier this month.
Thanks in part to the supply changes pushed through via the hard fork, a liquidity shortfall could ultimately serve to push ETH/USD to new historic peaks before BTC/USD manages to do the same.
“$ETH might reach its all-time high earlier than $BTC in the long term,” Ki summarized.
“Current $ETH price is closer to ATH compared to $BTC. Higher demand, lower supply. $ETH sell-side liquidity crisis still intensifies, while $BTC exchange reserve stopped its downward trend in May.”
In terms of numbers, Bitcoin exchange reserves declined from May onwards, only to return in late July. From a peak of 2.54 million on July 26, BTC reserves then declined to 2.44 million this week.
By contrast, ETH has seen a mostly linear downtrend since late May’s local high of 21.43 million held on exchanges. As of this week, the exchange balance is around 19.25 million.
Battle of the supply shocks
Ki is not alone in forecasting a more rampant bull charge for Ethereum than Bitcoin.
As Cointelegraph reported, Bloomberg Intelligence also came out favoring ETH over BTC in a recent report, even forecasting a “flippening” of the largest cryptocurrency.
Meanwhile, data continues to show a supply shock underway for Bitcoin as well, something which has its own historical precedent for sparking BTC price run-ups.
“Illiquid Supply Shock ratio has been a good leading indicator over the past few months,” analyst William Clemente commented on the latest figures from fellow on-chain analytics resource Glassnode.
“Impulses in both directions have resulted in price action following. As the metric continues to grind slowly upward, currently at levels prev. 58K BTC, watching for another major impulse.”
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