Ethereum, the second-largest cryptocurrency by market capitalization, is showing signs of bullish pressure as on-chain movements indicate a decrease in exchange balances and an increase in staking deposits. These factors suggest a tightening supply and growing demand for Ether (ETH) in the market. This article will explore these trends and analyze the potential price movement of ETH.
According to data from Glassnode, the percentage of ETH’s supply on crypto exchanges has reached an all-time low of 12.6%. This drop in exchange balances signifies a reduced supply of ETH available for selling, which is typically viewed as a bullish sign. The netflow volume of deposits and withdrawals from exchanges also shows a surge in withdrawals, particularly in June, possibly due to investor concerns over regulatory crackdowns on centralized exchanges such as Binance and Coinbase.
While it is important to consider that these withdrawals were driven by specific events and may not be directly indicative of overall market sentiment, the magnitude of these withdrawals is reminiscent of a similar situation in November 2022 when ETH saw a rapid surge in price following a dip in exchange balances. This suggests a potential bullish trend for ETH.
At the same time, the amount of ETH locked in staking contracts has significantly increased since the Shapella upgrade in April. Currently, over 23 million ETH, representing 19.1% of its total supply, is deposited in staking contracts. Additionally, nearly 30% of ETH’s supply is locked in various smart contracts, including those related to decentralized finance and staking. This shift in ETH from exchanges to locked contracts further reduces the liquid supply of ETH, which can contribute to upward price pressure.
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Turning to price analysis, Ether’s technical charts indicate a possibility of reclaiming the $3,000 level if buyers are able to push above the resistance between $1,900 and $2,000. The ETH/USD pair has already broken above the 50-day moving average, suggesting a bullish breakout. The $1,900-$2,000 level is seen as both technical and psychological resistance levels, according to the ascending triangle pattern. A successful breakout above $2,000 could propel ETH towards the 2022 breakdown levels of around $3,000, aligning with the targets of the bullish ascending channel pattern.
However, in ETH/BTC terms, there is a need for the pair to establish support around the 2023 lows of 0.06255 BTC. If sellers push the price below this level, bearish targets of 0.05689 BTC could come into play. Nevertheless, the relative strength index metric indicates oversold readings for the ETH/BTC pair, suggesting a potential pullback.
One cautionary factor to consider is the funding rate for the ETH perpetual swap contract, which has surged toward monthly highs. Perpetual swap traders pay funding rates on their open short or long positions, and when the demand for short orders exceeds that for long orders, shorting becomes relatively more expensive. This can act as a warning sign for late buyers, indicating the possibility of a price pullback.
Overall, while a short- to medium-term bearish trend cannot be ruled out, the on-chain movements and market indicators suggest a higher chance of upside potential for ETH. The performance of Bitcoin and its ability to hold the $30,000 level will also influence the bullish momentum of ETH.
It is important to note that this article does not provide investment advice or recommendations. Investors should conduct their own research and exercise caution when making trading decisions. The content provided here is for general information purposes only and does not constitute legal or investment advice. The views expressed belong solely to the author and do not necessarily represent the views of Cointelegraph.
