Since the beginning of May, Ethereum (ETH) has continued to demonstrate growth, surpassing the $1,750 mark and forming consecutive higher lows. The question arises whether the bulls can continue the rally and surpass the key $2,000 level.
Contents:
- Prospects of ETH Growth
- Increasing ETH Withdrawals: Investors Opt for Long-Term Storage and Passive Income
- Ethereum Reserves on Exchanges
- Major Investors Influencing the ETH Market: Price Increase Expected
- Resistance and Support for ETH
Prospects of ETH Growth
ETH is the native token of the Ethereum blockchain, a project founded by Vitalik Buterin, one of the influential figures in the crypto industry. In the fall of 2022, the entire project successfully transitioned from the energy-intensive Proof-of-Work (PoW) consensus mechanism to the Proof-of-Stake (PoS) algorithm. Additionally, in April 2023, the Shapella upgrade was successfully implemented, which included the EIP-4895 proposal. This proposal allowed investors to withdraw their ETH staked on the Beacon Chain.
In mid-April, Ethereum experienced a significant drop to the $2,000 level and has since struggled to surpass this mark. However, data from the Ethereum network itself indicates that investors are currently showing optimism and preparing for an upcoming price increase.
Increasing ETH Withdrawals: Investors Opt for Long-Term Storage and Passive Income
Investors holding ETH are becoming increasingly active in withdrawing their coins from exchanges. Instead, some of them prefer long-term storage options that do not require custodial participation. At the same time, a significant portion of investors is seeking opportunities for passive income, which Ethereum now provides through full staking.
Apparently, this trend continued to intensify last week as investors' withdrawals led to further decrease in ETH balances on exchanges to new all-time lows.
On June 5, 2023, the total amount of Ethereum (ETH) stands at 17.2 million, which is the lowest level since March 2018. From May 22 to June 5, crypto investors withdrew around 700,000 ETH from exchanges.
Ethereum Reserves on Exchanges
When investors decide to withdraw their coins from exchanges, it is usually perceived as a positive factor for the price for several reasons:
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It reduces the available supply of coins on exchanges that can be used for executing market orders. A sharp decrease in the available supply on crypto exchanges often leads buyers to offer higher prices in their bids as they compete for a limited amount of available coins. |
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When investors move their tokens from exchange wallets to staking smart contracts, they not only help secure the network but also provide the necessary liquidity for blockchain projects. Such reduction in exchange reserves caused by token transfers can potentially enhance future price growth of Ethereum. |
Major Investors Impacting the ETH Market: Price Increase Expected
Furthermore, analytical data obtained from the Ethereum network itself suggests that ETH coins sold by smaller institutional investors seem to be flowing into the hands of major investors.
- Major investors holding 1 million to 10 million ETH sold 500,000 coins from May 22 to June 5.
- Investors with balances ranging from 10 million to 1 billion ETH increased their holdings by 1.62 million ETH during the same period.
Due to the significant financial influence of major investors, their trading strategies traditionally have a substantial impact on price dynamics.
Currently, there are two whale clusters - groups of investors taking opposing trading positions regarding ETH. However, it appears that the cluster with greater financial power is actively absorbing all available coins for sale and even acquiring additional volumes.
Interestingly, the leading whale cluster at present is the largest one in the Ethereum ecosystem. Their actions may influence the sentiments of other retail and strategic investors.
Considering the sharp reduction in ETH supply on exchanges and the bullish activity among the largest players, a price increase is expected in the coming weeks.
Resistance and Support for ETH
According to IntoTheBlock's Global In/Out of Money Around Price (IOMAP) data, bulls in the ETH market must first overcome resistance around $1900. IOMAP tracks addresses that reached breakeven levels and reflects the distribution of holders along the coin's average purchase price. This helps identify areas of significant resistance and support.
At the level around $1895, 2.56 million addresses can be found that acquired 3.36 million ETH at this average price. Surpassing this level will lead to the emergence of the next resistance at the $2050 mark.
In the event of a breakdown of the key support level at $1800, bears would gain an advantage as this level will be defended by 3.76 million investors who acquired 3.55 million ETH at an average price of $1797. In such a scenario (although unlikely), a price decline to the $1700 mark is possible.
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