Ethereum's supply on exchanges drops to a new low since 2015, with its price remaining volatile amid complex market dynamics.
Reasons for Ethereum's Supply Drop
According to Santiment's analysis on March 21, the significant decrease in Ethereum's supply on exchanges is largely due to the growing popularity of decentralized finance and staking. More holders are opting to lock up their assets rather than keeping them on exchanges. Over the past seven weeks, Ethereum's exchange supply has dropped by 16.4%, indicating a long-term accumulation trend.
Impact on Ethereum's Price and Market
Despite the decrease in Ethereum's exchange supply, it has not led to a price increase. Since December, ETH has plunged by 47%, from $4,105 to $1,990 as of March 21. On-chain and technical indicators suggest further downside potential. Standard Chartered analysts recently lowered their ETH price target to $4,000 by year-end, citing increased competition from other networks, particularly Ethereum layer-2.
Technical Analysis and Outlook
Technical analysis indicates that Ethereum continues to face challenges. Price is encountering resistance at $2,042, where the 50-day moving average acts as a barrier. The Bollinger Bands show low volatility, suggesting consolidation. If ETH can break above $2,042, the next targets are $2,163 and $2,370. However, if the $1,986 level fails to hold, a decline towards $1,714 could occur, where previous buying interest has emerged.
Despite the decrease in Ethereum's exchange supply, its market still faces volatility and uncertainty. Future price catalysts may include changes in technical factors and institutional investments via ETFs.
