Ether price hits $3K as ETH balances on exchanges drop to all-time low

Ethereum’s on-chain activity indicates a bullish pressure build-up around Ether as its exchange balance has reached an all-time low and staking deposits continue to rise.

Ether (ETH) technical charts show that the asset could reclaim $3,000 if buyers are able to overcome the resistance between $1,900 and $2,000.

ETH held on exchanges hits all-time low

According to Glassnode data, exchange balances for ETH dropped sharply over the past 30 days to a new low of 12.6%. Lower supply on exchanges is usually a bullish sign, as it means fewer tokens are readily available for sale.

The net inflow volume of deposits and withdrawals from the exchanges has seen a huge increase in withdrawals since early June amid regulatory action on Binance and Coinbase.

The data should be taken with caution, as there were withdrawals from centralized exchanges by fearful investors.

However, the magnitude of the withdrawals and the bullish price action show similarities to November 2022 levels, when ETH rallied by more than 33% following a similar drop in exchange balances.

Meanwhile, the supply of ETH locked in staking contracts has increased significantly since the April Shepela upgrade. Currently, there are over 23 million ETH held in staking contracts, which is 19.1% of its total supply.

Data from Glassnode shows that around 30% of the ETH supply is locked in smart contracts including decentralized finance and staking contracts, up from 25.5% in early 2023.

Increased withdrawals from exchanges and deposits into smart contracts are positive for the price of ETH, as this reduces its liquid supply.

ETH/USD Price Analysis

Ether price broke above the 50-day EMA at $1,823.09, forming a bullish breakout.

The ETH/USD pair is currently facing resistance near the horizontal level of $1,906. According to an ascending triangle pattern, the pair has registered a higher low since November 2022, with the $1,900-$2,000 level acting as a technical and psychological resistance level.

A break above $2,000 could propel ETH bullish towards the breakdown level of around $3,000 in 2022. The targets of the bullish ascending channel pattern also coincide around these levels.

The ETH/BTC pair is looking to establish support around the 2023 low of 0.06255 with respect to bitcoin (BTC). If the sellers push the price below this level, the bearish target at 0.05689 BTC will be exposed.

Nevertheless, the Relative Strength Index metric is showing an oversold reading for the ETH/BTC pair, suggesting that a pullback is likely.

The funding rate for the ETH perpetual swap contract edged toward monthly highs, which is acting as a warning flag for buyers of late.

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Perpetual swap traders pay funding rates on their open short or long positions, depending on the demand for the asset. When demand for short orders exceeds demand for long orders, shorting becomes relatively more expensive, causing short traders to pay for longs.

There is a possibility that the price will retrace to the downside of an ascending triangle pattern around $1,680 on the ETH/USD pair.

Nevertheless, on-chain activities and market indicators suggest a higher upside potential than a bearish trend in the short- to medium-term.

Bitcoin price action and the ability of BTC buyers to sustain the $30,000 level will also play a key role in sustaining Ether’s bullish momentum.