Movements on the Ethereum chain indicate that bullish pressure is building around Ether as its exchange balances hit an all-time low and betting deposits continue to rise.
of ether (ETH) technical charts suggest the asset can reclaim $3,000 if buyers can break through resistance between $1,900 and $2,000.
ETH held on exchanges hits an all-time low
ETH exchange balances hit a new low of 12.6%, falling sharply over the past 30 days, according to data from Glassnode. Reduced supply on exchanges is usually a bullish sign, as it means fewer tokens are available for sale.
The volume of net flow of deposits and withdrawals from the exchanges shows a strong increase in withdrawals in early June amid a Regulatory crackdown on Binance and Coinbase.
The data should be taken with a grain of salt, as the withdrawals were caused by investors spooked by centralized exchanges.
However, the magnitude of the withdrawals and the bullish price action show a similarity to November 2022 levels, when ETH rapidly rose over 33% following an equivalent drop in exchange balances.
At the same time, the supply of ETH locked in staking contracts has increased significantly since Shapella April Update. Currently, more than 23 million ETH is deposited in staking contracts, representing 19.1% of its total supply.
Glassnode data shows that nearly 30% of ETH supply is locked in smart contracts, including decentralized finance and staking contracts, up from 25.5% in early 2023.
The increase in withdrawals from exchanges and deposits in smart contracts is positive for the price of ETH, since it reduces its supply of liquid.
ETH/USD Price Analysis
Ether price broke above the 50-day moving average at $1,823.09, staging a bullish breakout.
The ETH/USD pair is currently facing resistance around the $1906 horizontal level. The pair has recorded higher lows since November 2022, with the $1,900-$2,000 level acting as technical and psychological resistance levels, per the ascending triangle pattern.
A break above $2,000 could quickly boost ETH towards 2022 breakout levels of around $3,000. The bullish rising channel pattern targets also coincide around these levels.
The ETH/BTC pair is looking to establish support around the 2023 lows of 0.06255 in Bitcoin (BTC) terms. If the sellers push the price below this level, the bearish targets of 0.05689 BTC would be exposed.
However, the Relative Strength Index metric shows oversold readings for the ETH/BTC pair, suggesting that a pullback is likely.
The funding rate for the ETH perpetual swap contract rose towards monthly highs, acting as a warning sign for late buyers.
Related: Bitcoin ETF Momentum Fuels 'Fantastic' BTC Price Breakout of $29K
Perpetual swap traders pay funding rates on their open long or short positions, depending on demand for the asset. When the demand for short orders exceeds the demand for long orders, short positions become relatively more expensive, leading short traders to pay long positions.
There is a chance that the price could pull back towards the bottom of the ascending triangle pattern in the ETH/USD pair to around $1,680.
However, chain movements and market indicators give a higher probability of upside in a short to medium-term downtrend.
Bitcoin price action and the ability of BTC buyers to hold the $30,000 level it will also play a crucial role in maintaining Ether's bullish momentum.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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