Market data analysis reveals a remarkable surge in Ethereum’s price, reaching $3,663 on March 26, marking a significant 20% rise from its monthly low recorded on March 19. The surge underscores a shift towards optimism among investors, especially with the impending Bitcoin halving event.
In the wake of the post-DenCun Upgrade sell-off, Ethereum flirted with dropping below the $3,000 mark. However, recent on-chain data suggests a notable change in the sentiment of ETH investors, particularly as the Bitcoin halving approaches.
Amidst the aftermath of wholesale sell-offs following the DenCun upgrade and delays in anticipated Ethereum ETFs, Ethereum’s price is now in a phase of recovery, witnessing a notable 20% gain on the weekly chart.
On-chain data analysis indicates that this positive momentum in the Ethereum market can be attributed to strategic moves by investors in anticipation of potential impacts of the Bitcoin halving scheduled for April 20.
Since the commencement of the 30-day countdown to the Bitcoin halving on March 19, Ethereum investors have adopted a more conservative trading approach, as evidenced by the transfer of 200,000 ETH into long-term storage.
Cryptoquant’s exchange reserves metric, tracking the number of coins held in exchange wallets, serves as an indicator of investors’ inclination towards short-term selling or profit-taking. The decline of 200,000 ETH in exchange reserves over the past week suggests a growing reluctance among traders to sell, influenced by both timeframes and market conditions.
This shift coinciding with the 30-day countdown to the Bitcoin halving implies that the impending event could be a significant driver behind the change in Ethereum investors’ sentiment.
Regardless of the catalyst, a decrease in exchange reserves typically correlates with a positive impact on the asset’s price. The recent decline signifies a transfer of over $740 million worth of ETH into long-term storage or staking contracts, effectively reducing the immediate market supply.
With steady demand and diminishing supply, upward pressure on prices is inevitable. Consequently, Ethereum has already witnessed a 20% surge since the initiation of exchange outflows on March 19.
Should existing ETH investors maintain their conservative stance, the ongoing recovery in Ethereum’s price could gather further momentum in the coming days.
Forecasting Ethereum’s price, it appears poised for a breakout towards $4,000, supported by insights derived from the significant decline in ETH market supply, amounting to $730 million.
Analysis from IntoTheBlock’s In/Out of the Money chart reinforces this positive outlook, with Ethereum facing a notable resistance cluster at $3,758, supported by a majority of investors currently holding profitable positions within the current price range.
Barring significant macroeconomic pressures, the reluctance of these investors to sell suggests potential for a rebound towards $4,000.
In the event of a market downturn, however, bulls are likely to defend the psychological support level at $3,500.
