Analysts say the amount of ether stored on centralized cryptocurrency exchanges is at unprecedented lows, potentially leading to tight supply.
Ether (ETH) trading balances fell by 8.7% last Thursday, the lowest since the network was launched in mid-2015. The amount of assets held on exchanges remained low at 8.8% as of Sunday, according to data from Glassnode.
The amount of ETH on exchanges has declined by 43% since early July, when digital asset treasury (DAT) purchases began in earnest.
“ETH is quietly entering its tightest supply environment ever,” macro investment research feed Milk Road commented, adding that the levels are “unprecedented.”
By comparison, Bitcoin volume on exchanges was higher at 14.7%, according to Glassnode.
ETH continues to be pulled into hard-to-sell locations such as staking, restaking, layer 2 activity, DATs, collateral loops, and long-term storage, Milkroad added, suggesting that tight supply could drive price momentum.
“Sentiment feels heavy right now, but sentiment does not drive supply. While the market decides the next move, ETH supply is tightening in the background. As that gap closes, price will follow.”
Comparison of BTC and ETH stored on exchanges. Source: Glassnode
Volume momentum indicator shows buying strength
Analyst Psychodelic said on Friday that on-balance volume (OBV), a volume-based momentum indicator, has broken above resistance.
However, the price was rejected. This is a classic divergence that indicates hidden buying strength prior to an upward move.
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“This is a sign of buying strength, and price usually follows. While there are no guarantees in any indicator, we find that OBV tends to be one of the most reliable leading indicators.”
“Combined with the fact that the PA (price action) simply looks bullish, we think we will see a high before a meaningful pullback,” they added.
Ether OBV will break above the resistance value. Source: Sycodelic
ETH holds $3,000
Ether price has been hovering above $3,000 for the past five days, but failed to break out of the $3,200 resistance.
Over the past 24 hours, the asset has stabilized around $3,050 and is currently at that level.
Ether’s price performance against Bitcoin also drew attention last week with the ETH/BTC pair breaking above the downtrend line.
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