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Ethereum on Verge of $3K Surge as Exchange Reserves Plummet to Record Lows

A closer look at on-chain data suggests a potential ETH rally to $3,000.

Ethereum logo
Ethereum logo

Ethereum's on-chain activities are pointing towards a mounting bullish pressure surrounding Ether. This surge is being propelled by the all-time low of exchange balances for the cryptocurrency and an escalating wave of staking deposits.

Technical analysis of Ether projects that a price of $3,000 could be on the horizon if buyers are successful in breaching the resistance levels, currently sitting between $1,900 and $2,000.

Exchange Reserves Hit Rock Bottom: An Encouraging Sign

The amount of ETH held on exchanges has dropped to an unprecedented low of 12.6%, taking a sharp downturn in the past 30 days, according to data from Glassnode. This decrease in exchange supply is generally perceived as a bullish signal, indicating a reduced availability of tokens for sale.

The volume of deposits and withdrawals on exchanges has seen a significant rise in withdrawals at the beginning of June. This occurred amidst heightened regulatory scrutiny on cryptocurrency exchanges, such as Binance and Coinbase. Despite the fact that investor apprehension triggered these withdrawals, the significant scale and bullish price action closely resemble the pattern seen in November 2022. At that time, ETH saw a rapid surge of over 33% after a similar dip in exchange reserves.

Ethereum's Staking Contracts: A Growing Trend

The amount of ETH locked in staking contracts has seen a substantial increase since April’s Shapella upgrade. At present, over 23 million ETH are deposited in staking contracts, which corresponds to 19.1% of its total supply.

Glassnode's data reveals that nearly 30% of the total ETH supply is locked in smart contracts, such as decentralized finance and staking contracts, a noticeable rise from 25.5% at the beginning of 2023. This uptick in withdrawals from exchanges and deposits into smart contracts is a positive signal for Ether's price, as it limits its liquid supply.

The Outlook for ETH/USD Price

Ether's price recently managed to surpass the 50-day moving average at $1,823.09, indicating a bullish breakout. The ETH/USD pair is currently facing resistance at the $1,906 level, yet it has maintained a trend of higher lows since November 2022.

A breach above the $2,000 mark could potentially catapult ETH towards the 2022 breakdown levels of roughly $3,000, aligning with the targets of the bullish ascending channel pattern.

ETH/BTC Pair and Market Indicators

In terms of Bitcoin, the ETH/BTC pair is attempting to establish support around the 2023 lows of 0.06255. If sellers drive the price below this level, a bearish target of 0.05689 BTC could be revealed.

However, the relative strength index (RSI) metric for the ETH/BTC pair is currently showcasing oversold conditions, suggesting a potential pullback.

The funding rate for the ETH perpetual swap contract has rocketed towards monthly highs, acting as a warning signal for late investors.

Despite the possibility of a price pullback towards the bottom of the ascending triangle pattern on the ETH/USD pair to around $1,680, on-chain movements and market indicators favor the upside over a short- to medium-term bearish trend.

Lastly, the price action of Bitcoin and the ability of BTC buyers to maintain the $30,000 level will also have a significant impact on Ether's bullish momentum.