Experts Are Bullish On Ethereum As Exchange Supply Decreases To New All-Time Lows  

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Experts Are Bullish On Ethereum As Exchange Supply Decreases To New All-Time Lows  

Ethereum, the second largest cryptocurrency by market capitalization after Bitcoin, started the month confidently, demonstrating stability and being traded in a positive range within the last thirty days. These days, predictions revolve around Ethereum breaking its psychological $2K mark following the recent surges in price, as well as Bitcoin’s improved performance over the last two weeks.

Ethereum’s reduced supply on exchanges fuels a positive outlook on the token’s future value. According to recent data from on-chain analytics provider, Glassnode, the Ethereum amounts stored on cryptocurrency exchanges like Binance are gradually dropping to new lows, a movement that may prove advantageous for the token’s price and boost demand among more significant traders. As such, fewer tokens open to buy means that growing demand will place the token on the brink of a rise.

Besides the latest positive news, a number of notable institutional investors have given the token their blessing, appearing poised to increase their involvement in the cryptocurrency markets.  

The existing price predictions and suppositions are a mere indicator of the overall market’s sentiment on Ethereum and the whole cryptocurrency market. They don’t represent guarantees of future market moves, meaning deciding whether it’s now time to invest in the asset requires additional research and a profound understanding of the latest events.

Less ETH Is Readily Available On Exchanges For Sale, Possibly Pointing To A New Bull Run

According to on-chain analytics provider, Glassnode, the Ethereum amounts on cryptocurrency exchanges hit a new low of approximately 12.6% in the last several days, showing an abrupt slump within the previous month. The gradual reductions in the Ethereum supply on the exchange balances can indicate a future bullish moment for the token, as it translates to fewer coins that can be sold. Fewer tokens readily available for sale may boost the asset’s price if it keeps witnessing demand as the supply offered is diminished.

The traffic volume of withdrawals and deposits made on cryptocurrency platforms demonstrates a sharp increase in redemptions at the beginning of the month, owing to a regulatory crackdown on the popular exchanges Binance and Coinbase. Centralized exchanges’ actions led to a spike in investor fear and increased withdrawals. However, the latest events, the significance of the withdrawals, and the favorable price outlook indicate that Ethereum may perform comparably to how it did in November of last year, when it achieved 33% growth after a similar slump in exchange balances.

If the token exceeds its $2K mark, the increase will mark the first time since April of this year that the reigning altcoin has risen above this critical psychological level.

Why The Exchange Balance Is A Helpful Pointer Toward The Asset’s Future Performance

The ability to grasp and utilize on-chain metrics and technical analysis is among the most significant elements that make the difference between an experienced investor and an average cryptocurrency trader. While learning how to trade Ethereum, Bitcoin, or any other cryptocurrency profitably based on technical analysis can take plenty of time to master, on-chain metrics are more manageable and provide similar insights.

Cryptocurrency exchanges like Binance are among the best places to build this skill. Analyzing them involves grasping on-chain metrics, meaning common measurements that examine miner rewards, transaction volume, market capitalization and other critical details. This type of analysis isn’t suitable for the newbie trader, as the baggage of knowledge proves essential to comprehending the relationship between different metrics and the price movement of Ethereum or any other digital currency. However, for the cryptocurrency trader who has just tuned in to the cyber money realm, relating to the exchange balance as a pointer to the amount of cryptocurrency existing in the digital wallets of a cryptocurrency exchange can help further explain the phenomenon. For instance, when there’s a large amount of Ethereum stored in the exchange’s numerous wallets, the liquidity for purchasing and selling assets is consequently high. This great availability points out to increased activity in the token, meaning that making trades is easier as orders are fulfilled faster.

On the other hand, a decreased amount of Ethereum readily available in cryptocurrencies’ wallets translates to less liquidity in the market, resulting in greater price volatility. In the case of Ethereum, many experts and analysts believe this aspect may be a bullish indicator of its future performance if investors can Break through the resistance zone between $1,900 and $2,000.

More Ethereum Resides In Staking Contracts, Benefiting The Token’s Liquid Supply

The amount of Ethereum found in staking contracts has grown considerably following the Shanghai + Capella (Shapella) upgrade, which enabled owners to unlock their assets for the first time in three years. More than 23 million coins are now locked in staking contracts, accounting for almost 20% of the asset’s total supply, according to the same knowledge provider, Glassnode. The Ethereum supply secured in smart contracts represents around a third of its total supply, whether it’s staking contracts or DeFi, showing a growth of almost 4.5% from the beginning of the year.

More withdrawals from cryptocurrency exchanges and tokens invested in smart contracts may build bullish pressure around the leading altcoin, as these factors diminish the liquid supply and point to stable long-term growth.

Is It The Beginning Of The “Crypto Summer”? 

The latest Ethereum price movements may suggest a performance similar to that in November 2022, when its price witnessed a 33% increase following a reduction in the amounts held in exchange wallets. Additionally, the magnitude of the Ethereum funds stored in staking contracts shows that the most prominent investors are bullish on the cryptocurrency, inflicting hope that the market is on its way to recovery.

For now, Ethereum is in a good place. However, there’s no such thing as past performance or prediction that can guarantee the future of an asset, regardless of its volatility. If you are willing to invest in digital currency, ensure you don’t make biased decisions or let the fear of missing out (FOMO) guide your investments. While cryptocurrency has awarded investors significant gains, a similar undertaking requires in-depth research and only spending money that won’t burn a hole in your pocket if your investment doesn’t generate the expected returns.  

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