The price of Ethereum has been fluctuating recently, but there are some fundamental signals that indicate a potential bullish reversal in the near future. One key indicator is the supply of ETH on cryptocurrency exchanges, which has reached an unprecedented low level. According to crypto experts, this could have significant implications for the market.
On March 20, the analysis platform Santiment revealed that the supply of Ether available on crypto exchanges had dropped to 8.97 million ETH, the lowest level recorded since November 2015. This represents a significant decrease of 16.4% compared to the end of January balances. The movement suggests a long-term accumulation strategy by crypto investors who may be betting on the resilience of the Ethereum blockchain network.
This phenomenon, known as a “supply shock,” occurs when the scarcity of a digital asset creates upward pressure on its price if demand remains steady. Santiment also noted that Ethereum holders are withdrawing their tokens from exchanges at a faster rate than ever before, a trend that preceded a surge in the price of Bitcoin in early 2024.
Despite a recent 26% drop in value, Ethereum continues to attract large holders. The cryptocurrency is currently trading around $1,971, and ETH ETFs have experienced 12 consecutive days of outflows totaling $370.6 million. This trend reflects a temporary loss of confidence among some institutional investors, but traders and crypto whales remain optimistic.
Some analysts predict that buyers will soon be in competition, leading to bidding wars that could drive the price of Ethereum to between $8,000 and $10,000, representing a 64% increase compared to its all-time high in 2021. However, not everyone shares this optimism, as some point out that ETH is at its lowest against BTC in five years, making a return to previous highs seem unlikely in the short term.
Despite the potential for a supply shock, declining liquidity, and market volatility, Ethereum could surprise to the upside in the coming months. However, caution is advised for any crypto investor, especially in light of the collapse of on-chain activity threatening Ethereum’s stability. The market remains unpredictable, and investors should carefully consider their options before making any decisions.