As Ethereum’s price rises above $3,100, marking a 2.3% increase over the last day, the cryptocurrency world breathes a sigh of relief. However, a look at the overall trend reveals a 3.3% decline over the week, a reminder of the bearish trend that Ethereum continues to grapple with.
This modest respite from the downward trend has led to a renewed interest in Ethereum’s underlying on-chain metrics as analysts try to decode the future of this cryptocurrency. One metric garnering attention is Ethereum’s spot exchange reserves, which have been on a steady decline.
Cryptoavails, an analyst with CryptoQuant QuickTake platform, has been studying this trend. The analysis reveals that during the 2017-2018 bull market, driven by a surge in investor interest, Ethereum reserves on spot exchanges reached their zenith. The following years saw another significant increase, thanks to the DeFi ecosystem and Ethereum-based projects.
However, a stark change was observed in late 2021. Large withdrawals became more frequent, leading to a sharp decline in reserves by 2023. Reduced levels continued into 2024, signaling a potential supply shortage. This trend indicates that market participants are withdrawing Ethereum from exchanges for long-term storage, reducing the supply available for immediate trading.
This reduced supply could put upward pressure on prices. Cryptoavails noted that as reserves decreased from 2022, Ethereum’s price began to stabilize at higher levels. This pattern suggests that low reserve levels could support future price increases and potentially trigger a new upward trend.
From a technical standpoint, Ethereum has shown patterns that analysts interpret as bullish. One such analyst, Crypto Ceaser, recently highlighted a bounce in Ethereum’s price as a significant opportunity, expressing his view that Ethereum is undervalued and may be poised to reach new all-time highs.
However, not all analyses paint a uniformly optimistic picture. Anup Dhungana, another crypto analyst, pointed out a divergence in the market behavior of Bitcoin and Ethereum. Despite Bitcoin’s steady uptrend, Ethereum’s performance against Bitcoin has been less robust, with ETH/BTC forming lower lows. This divergence reflects reduced investor interest in Ethereum relative to other assets.
According to Dhungana, the next technical support level for ETH/BTC may lie between 0.028 and 0.026. A rebound from this level could potentially revive broader interest in Ethereum and altcoins, paving the way for another phase of growth.
The pendulum of Ethereum’s fate may swing in any direction, but the key lies in understanding the underlying metrics and technical analyses. As Ethereum continues to navigate the choppy waters of the crypto market, analysts and investors alike will be keeping a close eye on its progress.
