On Dec. 17 , Ether (ETH) price rallied to $677, its highest level since May 2018, and it seems the top altcoin’s price was driven by Bitcoin’s (BTC) swift move above $21,000. It’s also possible that the CME’s ETH futures launch announcement also played its part.

Solid fundamentals and positive newsflow also seem to be helping Ether to hold above $640 for the past few days, and despite today’s dump, these fundamentals remain. Eth2 staking surpassed $1 billion in total value locked, and this shows that large players are committed for the long-term, as it is not currently possible to redeem these tokens.

To understand whether the recent pump reflects a temporary excitement or potentially a new price level, one should gauge the usage metrics on the Ethereum network.

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

ETH/USD price vs. Transactions and Transfers. Source: DigitalAssetsData

The chart above shows just how strongly the indicator recovered after a brief drop on Dec. 15. The sustained level above $2 billion daily transactions and transfers signals a healthy improvement from the previous two months.

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

Exchange withdrawals resumed

Increasing withdrawals from exchanges can be caused by multiple reasons, including staking, yield farming and buyers sending coins to cold storage. Usually a steady flow of net deposits indicates a willingness to sell in the short term.

ETH/USD price (red) vs. Exchanges Net Flow. Source: Nansen & CoinMarketCap

Between Dec. 16 and 18, exchanges faced 232,000 Ether deposits, reverting a trend that lasted 14 days. During those two weeks, withdrawals surpassed deposits by 470,000. This shows that there was sell pressure as Ether's price crossed above $600.

It is worth noting that Dec. 19 marked a 293,000 Ether net withdrawal, the largest outflow since Oct. 14. Thus, the initial movement of investors rushing to take profit above $600 might have dissipated.

Although it is too soon to determine whether a second wave of deposits will hit exchanges, so far, the indicator shows traders are willing to accumulate at the current price levels.

The futures premium peaked but has since normalized

Professional traders tend to dominate longer-term futures contracts with set expiry dates. By measuring the expense gap between futures and the regular spot market, a trader can gauge the level of bullishness in the market.

The three-month futures should usually trade with a 1.5% or higher premium versus regular spot exchanges. Whenever this indicator fades or turns negative, this is an alarming red flag. This situation is known as “backwardation” and indicates that the market is turning bearish.

Mar. 2021 ETH futures premium. Source: Digital Assets Data

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

Still, the current rate above 4% equals a 17% annualized premium and is significantly higher than the levels seen in previous months. This shows that despite the weakness seen on Dec. 19, professional traders are still confident in Ether's bullish potential.

Spot volume is recovering

In addition to monitoring futures contracts, profitable traders also track volume in the spot market. Breaking resistance levels on low volumes is somewhat intriguing because, typically, low volumes indicate a lack of confidence. Therefore, significant price changes should be accompanied by robust trading volume.

ETH aggregate spot exchanges volume. Source: Coinalyze.net

Even if Dec. 17 is excluded, the impressive $3.2 billion in volume over the past week is still considerably higher than average. Volume spikes usually accompany new price highs, although some volume accumulation is expected afterward.

The current weekly $1.5 billion daily average volume signal strength leaves no doubt that a decent flow backed the $600 resistance break.

Options put/call ratio

By measuring whether more activity is going through call (buy) options or put (sell) options, one can gauge the overall market sentiment. Generally speaking, call options are used for bullish strategies, whereas put options are used for bearish ones.

A 0.70 put-to-call ratio indicates that put options open interest lag the more bullish calls by 30% and is therefore bullish.

ETH options put-to-call ratio. Source: Cryptorank.io

Since Dec. 11, investors have been trading higher volume on call options. This signals a trend reversal from a more bearish movement that lasted two weeks.

This data is very encouraging, considering that Ether has rallied 20% since Dec. 11, yet there is no sign that investors have been buying more neutral-to-bearish option strategies.

Despite some signs of weakness after Ether tested its $677 high on Dec. 17, each of the five indicators discussed above has held a bullish level.

As Ether managed to quickly recover from its sub-$600 dip on Dec. 21, investors gained further confidence that the uptrend hasn't been broken.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.