Market dynamics and liquidity analysis before Ethereum ETF approval

The total amount of Ethereum pledged is constantly rising and is currently close to an all-time high, reaching 33.3 million ETH, accounting for 27.7% of the entire Ethereum supply. Behind this growth is the market's expectation that the United States will soon approve a spot Ethereum ETF within two weeks, which has stimulated investors' enthusiasm for buying. They hope to capture the possible price increases after the ETF's approval through early layout.

Julio Moreno, head of research at CryptoQuant, pointed out that the current amount of ETH pledged is not only increasing, but is also very close to its historical peak. This phenomenon suggests that while Ethereum’s supply is slowly growing, its properties as an inflationary asset are re-emerging, which could undermine its appeal as a store of value. To address this challenge, staking Ethereum became a strategy that not only locked up ETH for a period of time, but also reduced the supply by burning or permanently removing it from circulation.

Moreno further emphasized that the total supply of ETH has reached its highest level since December 11, 2023, marking the end of the “supersonic currency” narrative. This change is critical to understanding Ethereum’s long-term value and market dynamics.

Image: CryptoQuant

About Ethereum’s liquidity

Moreno said that based on the latest spot volume data, Ethereum (ETH) liquidity may be on par with Bitcoin (BTC). In the past few weeks, ETH's spot trading volume has remained between 80% and 90% of Bitcoin's trading volume, showing that its activity and market acceptance as a trading asset are rapidly increasing, and its transaction convenience is gradually approaching Cryptocurrency market leader Bitcoin.

Furthermore, according to data from CoinMetrics, approximately 12% of the total Ether supply is currently used in smart contracts or bridges connecting different blockchains. If you include staked tokens, approximately 40% of the Ether cryptocurrency supply is considered “locked” and not actively traded. This locking not only reduces the circulation in the market, but also provides support for the value stability of Ethereum.

Currently, the market’s focus is on the approval of an Ethereum spot ETF. The approval is expected to attract new capital inflows, pushing Ethereum prices to $6,000 and beyond to higher all-time highs. Meanwhile, analysts expect billions of dollars to flow into the Ethereum market within months of the ETF’s approval.

At the same time, Tron founder Justin Sun has also shown great interest in Ethereum, actively purchasing more than $1.1 billion worth of ETH in the past few months. This behavior not only reflects the market’s recognition of the value of Ethereum, but may also indicate further activity in the Ethereum market in the future.

Conclusion:

As the approval of a spot Ethereum ETF approaches, market interest in Ethereum (ETH) has surged, and the market's popularity has also increased significantly. The active layout of investors and the increase in pledge volume indicate that the Ethereum market may enter an active period and usher in a re-evaluation of value. During this period, market demand for ETH and trading activity are expected to reach new heights.

While the growth of Ethereum’s supply may challenge its status as a store of value, the implementation of staking strategies and positive market expectations for ETF approval provide support for Ethereum’s long-term growth and stability. Analysts and investors need to pay close attention to the approval progress of the Ethereum ETF, which will be a key factor affecting the liquidity and price of the Ethereum market.

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