Prediction: $
The price of Ethereum experienced a significant surge on March 26, reaching $3,663, which is a 20% increase from the monthly low observed on March 19. Market data indicates that investors have adopted a more optimistic outlook as the Bitcoin halving approaches.
Last week, Ethereum came close to falling below $3,000 following the sell-off that occurred after the Dencun Upgrade. However, with the Bitcoin halving drawing nearer, on-chain data reveals a notable shift in the sentiment of ETH investors.
In anticipation of the Bitcoin halving scheduled for April 20, investors have made strategic moves to front-run potential impacts. Since the 30-day countdown to the halving began on March 19, Ethereum investors have adopted a more conservative trading approach.
Cryptoquant’s exchange reserves metric, which tracks the number of coins held in crypto exchange wallets and trading platforms, serves as an indicator of investors’ inclination to sell or seek profit-taking opportunities. As of March 19, investors held a total of 14.2 million ETH across various exchanges and platforms. However, this figure has decreased by 200,000 ETH over the past week.
The decline in exchange reserves suggests that traders are increasingly inclined to hold onto their assets and may be hesitant to sell, depending on market conditions and timeframes. This shift in investor sentiment can be attributed to the 30-day Bitcoin halving countdown.
A decrease in exchange reserves often has a positive impact on the price of the underlying asset. In this case, the decline in reserves means that over $740 million worth of ETH has been transferred out of immediate market supply and into long-term storage options or staking contracts. With steady demand and shrinking supply, this puts upward pressure on prices. As a result, the price of ETH has already surged by 20% since the outflows from exchanges began on March 19.
If more existing ETH investors continue with their conservative approach, the recovery phase of Ethereum’s price could accelerate in the coming days.
Analyzing the $730 million decline in ETH market supply, it appears that Ethereum’s price is poised to break out towards $4,000 ahead of the Bitcoin halving. The In/Out of the Money chart from IntoTheBlock supports this positive outlook. There is a significant resistance cluster at $3,758, with 854,150 addresses holding 981,710 ETH at that price.
Additionally, the IOMAP chart indicates that 76.9% of investors who bought ETH within the 20% range of the current prices are in profitable positions. Unless there are major external pressures, most of these investors may be reluctant to sell, which opens the possibility of a rebound to $4,000.
However, if there is another market downturn, the bulls are likely to defend the psychological support level at $3,500.
In other news, the SEC has delayed its decision on the VanEck Ethereum ETF, while Bitcoin and Ethereum options worth $2.6 billion are set to expire, causing investors to exercise caution.
