Key Points
- Ethereum’s available supply on exchanges has dropped to its lowest since November 2015.
- 360,000 ETH tokens were withdrawn from crypto exchanges in the last 48 hours.
Despite reaching the $2,000 mark, Ethereum (ETH) quickly lost this value.
Despite a record-low supply on exchanges, Ethereum has struggled to gain upward momentum, declining nearly 47% from its December high of $4,105 to its March 21 price of $1,970.
Lowest Available Supply in Years
According to blockchain analysis platform Santiment, Ethereum’s available supply on exchanges has dropped to 8.97 million ETH, the lowest since November 2015. This marks a 16.4% decline in just seven weeks, fueled by the rising popularity of decentralized finance (DeFi) and staking.
The reduction in exchange-held Ethereum suggests an ongoing accumulation phase, which historically has led to supply squeezes that favor bullish price action in the long term.
Prominent analyst Ali Martinez noted that a whopping 360,000 Ethereum tokens were withdrawn from crypto exchanges in the last 48 hours, indicating that holders are bullish on the price action of the cryptocurrency.
Martinez also shared a chart highlighting key support and resistance levels, with a recent breakdown below a critical horizontal support level around $2,050.
Reduced Activity and Revenue
Despite the supply crunch, Ethereum has underperformed due to reduced mainnet activity and declining fee revenue. Ethereum Layer-2 networks such as Arbitrum and Base have gained traction, offering lower transaction fees, which has drawn users away from the Ethereum mainnet.
This shift has impacted Ethereum’s revenue, with fees dropping from $218 million in December to just $46 million in February. Moreover, Ethereum’s total value locked (TVL) in DeFi has declined from $76 billion in December to $46 billion.
Staking ETFs: A Potential Game-Changer?
Institutional interest in Ethereum remains tepid, with $370 million in outflows from Ethereum Spot ETFs over the past month. However, the upcoming decision by the United States Securities and Exchange Commission (SEC) regarding Ethereum staking ETFs could change the game.
If approved, staking ETFs could provide a new avenue for institutional investors, increasing demand and reducing liquid supply further. In February, Cboe BZX Exchange filed a 19b-4 application for approval to stake Ethereum held in an Ethereum ETF on behalf of 21Shares.
Ethereum (ETH) Price Analysis
The Relative Strength Index (RSI) stands at 40.72, signaling neutral to slightly bearish momentum for Ethereum. The gradient of the line suggests sluggish momentum in the short term.
Ethereum’s price is trading near the lower Bollinger Band, indicating that it is in a downward trend but could see a temporary mean reversion toward the middle band ($2,040.92). The upper resistance level at $2,368.70 remains a key level to watch.
