IMPORTANT POINTS:
- Ether reserves on exchanges have reached an all-time low, suggesting upward pressure.
- More than 23 million ETH are held in staking contracts, which reduces the liquid supply and can boost the price of ETH.
- Ether could reach $3,000, although Bitcoin’s performance and its resistance at $30,000 are crucial factors.
On-chain data and ETH price charts are starting to hint at a possible rally to $3,000. Ethereum’s on-chain movements indicate increasing bullish pressure around Ether, as Ether reserves on exchanges have reached their lowest level, while staking deposits continue to rise.
The historic drop in ETH on the stock exchanges
Ether reserves on exchanges have fallen sharply to a 30-day low of 12.6%, according to data from Glassnode.
A reduced supply on exchanges is generally a bullish sign, as it means fewer tokens are available for sale. On the other hand, the net volume of deposits and withdrawals from exchanges shows a sharp increase in withdrawals in early June amid a regulatory crackdown on Binance and Coinbase.
However, the data should be taken with a grain of salt, as the withdrawals were prompted by investors spooked by centralized exchanges. However, the magnitude of the withdrawals and the bullish price action show similarities to November 2022 levels, when ETH rapidly rose more than 33% following an equivalent drop in exchange reserves.
Increase in staking contracts
At the same time, the supply of ETH locked-in staking contracts has increased significantly since the Shapella update in April. Currently, more than 23 million ETH are deposited in staking contracts, representing 19.1% of its total supply.
Furthermore, data from Glassnode shows that close to 30% of the ETH supply is locked in smart contracts, including decentralized finance and staking contracts, an increase from 25.5% in early 2023.
Increased withdrawals from exchanges and deposits into smart contracts are positive for the ETH price, as they reduce its liquid supply.
ETH/USD Price Analysis
The Ether price broke above the 50-day moving average at $1,823.09, marking a bullish breakout.
The ETH/USD pair is currently facing resistance around the $1,906 horizontal level. This pair has recorded higher lows since November 2022, with the $1,900-2,000 level acting as technical and psychological resistance levels, in keeping with the ascending triangle pattern.
A break above $2,000 could quickly propel ETH towards 2022 crash levels around $3,000. 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 terms. If the sellers push the price below this level, it would expose the bearish targets of 0.05689 BTC.
However, the Relative Strength Index shows oversold readings for the ETH/BTC pair, suggesting that a correction is likely.
The funding rate for the ETH perpetual swap contract spiked towards monthly highs, acting as a cautionary flag for late buyers.
Perpetual swap traders pay funding rates on their open long or short positions, depending on demand for the asset. If the demand for short orders exceeds the long ones, selling short becomes more expensive, making the short traders pay for the long ones.
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, the chain movements and market indicators give a higher probability of a bearish trend in the short and medium term.
Bitcoin price action and the ability of buyers to hold the $30,000 level will play a crucial role in driving Ether forward.
