Ethereum is slowly making a comeback with its price trekking above the $3,100 mark, reflecting a 2.3% gain over the last 24 hours. Despite this minor uptick, the cryptocurrency is still facing a downward trajectory, having dropped 3.3% throughout the week.
This slight recovery provides some comfort, but Ethereum is not entirely out of the woods yet. The broader bearish trend continues to affect its performance, compelling analysts to delve into Ethereum’s on-chain analytics to gauge its future prospects.
One important metric under scrutiny is Ethereum’s spot exchange reserves. In a recent report by Cryptoavails, an active contributor to the CryptoQuant QuickTake platform, it was observed that Ethereum reserves on spot exchanges have been progressively dwindling. This trend hints at a significant shift in how investors are managing their assets.
Ethereum Spot Exchange Reserves Trend
Cryptoavails revealed that Ethereum’s reserves on spot exchanges have experienced notable fluctuations over the years. During the bull market spanning 2017-2018, reserves hit an all-time high, spurred by a massive influx of investor interest.
The period between 2020 and 2021 witnessed another notable surge, driven by the flourishing DeFi ecosystem and Ethereum-centric initiatives. However, from late 2021 onward, there was a sharp downturn in exchange reserves as significant withdrawals became a frequent occurrence.
By the time 2023 rolled around, reserves had plummeted to new lows, and this trend persisted into 2024, indicating a potential scarcity. Traditionally, such a decline in reserves signals that holders are moving Ethereum off exchanges, opting to hold it long-term rather than keeping it readily available for trading.
This reduced supply on exchanges can, in turn, place upward pressure on prices. Cryptoavails noted that from 2022, as exchange reserves diminished, Ethereum’s price began stabilizing at higher levels. This phenomenon suggests that low reserve levels might bolster further price hikes, potentially sparking a fresh upward trend.
Technical Analysis Of ETH
From a technical analysis standpoint, Ethereum has displayed patterns that many interpret as bullish indicators. Renowned figures within the crypto community have provided their perspectives.
A prominent analyst known as Crypto Caesar recently mentioned in a tweet that Ethereum’s price rebound represents a major opportunity. He believes the cryptocurrency is undervalued, suggesting the possibility of reaching new all-time highs soon.
On the other hand, not every analyst is equally optimistic. Anup Dhungana, another seasoned crypto analyst, highlighted a divergence between Ethereum and Bitcoin’s market behavior.
While Bitcoin has consistently followed an upward trajectory, Ethereum’s performance when compared to Bitcoin has been a bit lackluster, with the ETH/BTC pair forming lower lows. This discrepancy could indicate a waning interest in Ethereum among investors compared to other digital assets.
Dhungana identifies the next technical support level for the ETH/BTC pair to be between 0.028 and 0.026. A bounce from this level could rekindle interest in Ethereum and altcoins, potentially setting the stage for another growth phase.
Featured image created with DALL-E, Chart from TradingView.
