Ethereum Price Poised for $4,000 Breakout as Exchange Supply Dips

Ethereum Nears $4,000 Breakout as Exchange Supply Shrinks Ask

Ethereum price is currently holding strong above $3,600 after briefly testing resistance near $3,800 earlier this week. Analysts suggest that growing institutional interest, increasing ETF momentum, and limited token supply are key forces behind Ethereum's latest rally. 

The cryptocurrency has surged over 50% in the past month alone, with whale accumulation and corporate treasury buys adding fuel to the uptrend.

ETH recorded a 10% weekly gain, supported by strong inflows into spot ETFs and encouraging macroeconomic developments. These bullish signals could push Ethereum past the $4,000 mark in the near term. 

As investor demand grows and supply remains tight, market watchers anticipate further upside potential. The convergence of positive technicals and fundamentals continues to drive momentum, with many predicting a sustained breakout ahead.

Ethereum Exchange Supply Falls to Multi-Year Low, Signaling Potential Market Shock

Ethereum supply on centralized exchanges has hit the lowest point in years, sitting at below 19.5 million. Such a significant decrease of exchange reserves accompanies the rise of the price of ETH, which could have market bearing.

The market analysts are of the view that this decline is not just a fluke. Once Ethereums is removed off the exchanges, its supply available to be sold and traded reduces. Considering the fixed or rising demand, such a decrease in availability may make the market tighter in terms of access to liquidity, which may add to bearish prices.

Source: Tweet

Based on recent statistics, the mechanics here are easy to read in that lesser tokens stored in exchanges tend to represent less sell pressure. This action normally comes before price rally whereby the supply becomes low and buyers fight over the little supply.

There is a CryptoQuant chart that points to this trend. It indicates that Ethereum has gradually depleted its reserves of exchanges since the end of 2022. Reserves are at a multi-year low according to the recent reading. At the same time, the price of ETH is subject to several boosts, which strengthens the scenario of an emerging shortage.

Will ETH Price Hold $3600 Support Level?

The ETH price slipped slightly on Tuesday, closing at $3,628, as selling pressure increased near key resistance levels.

Ethereum opened the session at $3,630 and touched an intraday high of $3,681 before dropping to a low of $3,513. The price struggled to maintain momentum after reaching the $3,800 resistance zone, which acted as a strong ceiling.

Source: ETH/USDT 1-day chart: TradingView

The Relative Strength Index (RSI) had a value of 76, although it had already reached 80, which is a sign of overbought. This indicated that consumers had perhaps begun to run out of gas.

The Moving Average Convergence Divergence (MACD) too displayed a weakness in bullish momentum. Though the MACD line was above the signal line, the bars of the histogram were sliding down indicating the decline in the strength of buying.

The Immediate support was found at $3,500. A break below this level could open the door to further declines toward $3,000.

On the upside, ETH needed to reclaim the $3,800 level with strong volume to target the psychological barrier at $4,000. A daily close above $4,000 could extend the bullish trend, with $4,200 as the next target.