Ether’s supply on crypto exchanges has dropped to its lowest level since November 2015, leading some analysts to predict a major price rally despite recent bearish sentiment.
“Ethereum’s holders have now brought the available supply on exchanges down to 8.97M, the lowest amount in nearly 10 years (November, 2015),” crypto analytics platform Santiment said in a March 20 X post.
Santiment said ETH had been rapidly leaving crypto exchanges, with balances now 16.4% lower than at the end of January. This suggests that investors are moving their ETH into cold storage wallets for long-term holding, potentially holding more conviction that Ether’s (ETH) price will rise in the future.
A significant decline in ETH supply across crypto exchanges can signal a potential price surge soon, commonly known as a “supply shock.” However, a surge will only happen if demand remains strong or increases to outpace the reduced supply.
It was recently seen in Bitcoin (BTC). On Jan. 13, Bitcoin reserves on all crypto exchanges dropped to 2.35 million BTC, hitting a nearly seven-year low that was last seen in June 2018. Just a week later, Bitcoin surged to a new high of $109,000 amid the inauguration of US President Donald Trump.
Some crypto traders and analysts anticipate a similar scenario for Ether.
Crypto trader Crypto General told their 230,800 X followers that it is “Just a question of time before the big supply shock.”
Crypto commentator Ted said in a March 19 X post that with ETH supply on crypto exchanges decreasing by the day, “buyers will soon compete, leading to bidding wars.”
Meanwhile, crypto trader Naber said in an X post on the same day that the largest ETH accumulation is taking place, and it may lead to Ether reaching the $8,000 to $10,000 price range. Even at the lower end of $8,000, Ether would be up 64% from its all-time high of $4,878, reached in November 2021.
While the supply decline is giving crypto traders hope for ETH, other signals have recently cast a bearish shadow over the asset.
Its performance against Bitcoin has been at its lowest in five years. Daan Crypto Trades said in a March 19 X post that it is “unlikely to see this anywhere near its highs anytime soon.”
Ether is currently trading at $1,971, down 26% over the past month according to CoinMarketCap data. Meanwhile, spot Ether ETFs have had 12 straight days of outflows totaling $370.6 million, according to Farside data.
“This has been one brutal downtrend,” Daan Crypto Trades added.
Scott Melker, aka “The Wolf of All Streets,” said, “Either Ethereum bounces here and this is a generational bottom, or it’s over.”
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.