Projected: $
The price of Ethereum experienced a significant surge on March 26, reaching $3,663. This marks a 20% increase from its lowest point earlier in the month on March 19. Market data indicates that investors have become more optimistic as the Bitcoin halving approaches.
Last week, Ethereum came close to dropping below $3,000 after the sell-off following the Dencun Upgrade. However, with the Bitcoin halving drawing near, on-chain data reveals a notable shift in the sentiment of ETH investors.
Investors have moved 200,000 ETH into long-term storage as the countdown to the Bitcoin halving reaches 30 days. This strategic move suggests that investors are preparing for potential impacts of the halving, which is scheduled for April 20.
After the sell-offs and delays surrounding the Dencun upgrade and the anticipated Ethereum ETFs, the price of ETH is now in a recovery phase, with a 20% increase on the weekly chart.
On-chain data trends indicate that this positive shift in ETH market momentum can be attributed to investors taking precautionary measures ahead of the Bitcoin halving. Since the countdown hit the 30-day mark on March 19, Ethereum investors have adopted a more conservative trading approach.
The exchange reserves metric provided by Cryptoquant tracks the number of coins held in crypto exchange wallets and trading platforms. It serves as a proxy for determining whether investors are more likely to sell or seek profit-taking opportunities in the short term.
As of March 19, investors held a total of 14.2 million ETH coins across various exchanges and platforms. However, this number has decreased by 200,000 ETH over the past week. A decline in exchange reserves suggests that traders are choosing to hold onto their assets and may be hesitant to sell, depending on the timeframe and market conditions.
The correlation between this shift in the 30-day Bitcoin halving countdown and the decline in exchange reserves indicates that the halving event could be a significant factor driving the change in Ethereum investors’ sentiment.
Regardless of the catalyst, a decrease in exchange reserves often has a positive impact on the price of the underlying asset. In this case, it means that over $740 million worth of ETH coins have been transferred out of the immediate market supply and into long-term storage or staking contracts within the past week.
If demand remains steady and the supply continues to shrink, it creates upward pressure on prices. As expected, the price of ETH has already increased by 20% since the outflows from exchanges began on March 19.
Therefore, if more ETH investors maintain a conservative outlook, the recovery phase of Ethereum’s price could accelerate even further in the coming days.
Taking into account the $730 million decline in ETH market supply, there are indications that Ethereum’s price is poised for a breakout towards $4,000 leading up to the Bitcoin halving. The In/Out of the Money chart from IntoTheBlock also supports this optimistic view. ETH currently faces a significant resistance cluster from 854,150 addresses that acquired 981,710 ETH at the maximum price of $3,758.
Furthermore, the IOMAP chart shows that 76.9% of investors who bought ETH within the 20% range of the current prices are in a profitable position. Unless there are major external factors influencing the market, most of these investors may be reluctant to sell, potentially opening the door for a predicted rebound to $4,000.
However, in the event of another market downturn, the bulls are likely to defend the psychological support level of $3,500.
In related news, the SEC has postponed its decision on the VanEck Ethereum ETF, and investors are showing caution as $2.6 billion worth of Bitcoin and Ethereum options are set to expire.
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