Ethereum has largely traded between $2,600 and $2,800 since its February 3 crash. This stagnant price movement has left investors uneasy. However, a brief surge above $2,800 this week has fuelled speculation about a potential turnaround. Despite failing to sustain the upward momentum, experts believe ETH may be nearing a pivotal moment in its trajectory.
Accelerated Exchange Withdrawals
Recent data from Santiment reveals Ethereum is showing mild signs of recovery, trading near $2,700 and outperforming most altcoins. Notably, ETH is being withdrawn from exchanges at a “shocking pace,” with only 6.38% of its supply remaining on trading platforms, the lowest since its inception.
This trend suggests investors are moving ETH to cold wallets, indicating long-term confidence. Additionally, community interest in Ethereum surged in February, reflecting renewed optimism. After underperforming in 2024, many anticipate a stronger recovery as market conditions improve.
Room for Growth
Ethereum’s market dominance has halved since April 2023, dropping from 20.5% to 10.5%. Liquidity and attention have shifted to competitors like Solana and XRP. Despite this, experts like Nick Forster, founder of Derive.xyz, remain optimistic.
Forster highlights the upcoming Pectra upgrade, set for April 8, as a potential game-changer. The upgrade promises faster transactions, improved staking mechanics, and enhanced network security. Furthermore, the Ethereum Foundation’s $120 million allocation to DeFi projects signals a renewed focus on adoption and institutional interest.
Ether Reserves on Exchanges Hit 9-Year Low
Ether reserves on centralised exchanges have plummeted to their lowest level in nearly nine years. CryptoQuant data shows reserves fell to 18.95 million ETH on February 18, the lowest since July 2016.
This diminishing supply could trigger a “supply shock,” where strong buyer demand meets limited availability, potentially driving prices higher. Analysts view this as a bullish signal, suggesting investors are preparing for long-term holding rather than short-term sales.
Momentum and Key Resistance Levels
Despite positive indicators, Ether has struggled to gain momentum over the past year. It has fallen 3.67% on the yearly chart and declined 19% year-to-date. Currently, ETH faces significant resistance at $2,750 and $2,800. Breaking through these levels could liquidate over $822 million in leveraged short positions, according to CoinGlass data. Such a move would likely fuel further price appreciation.
Staking ETFs
The introduction of staking for Ether exchange-traded funds (ETFs) could be a major catalyst for ETH’s price. Marcin Kazmierczak, co-founder of Redstone, believes staking ETFs could tighten Ethereum’s liquid supply and reinforce its value as a prime investment asset.
The US spot Ethereum ETFs have recorded net inflows of nearly 145,000 ETH this month, a sevenfold increase from January. This surge highlights ETH’s enduring appeal among investors seeking regulated exposure.
A Turning Point for Ethereum?
Ethereum’s dwindling supply on exchanges, coupled with upcoming network upgrades and institutional interest, paints a promising picture. While short-term challenges remain, the long-term outlook appears bullish.
As investors continue to move ETH into cold storage and staking mechanisms evolve, Ethereum may be on track for a significant recovery. Whether ETH can break through key resistance levels and sustain upward momentum remains to be seen, but the signs of a potential turnaround are undeniable.
