Ethereum (ETH) has been hinting at a potential price surge, with several key factors converging to create a bullish scenario. This comes as the world’s second-largest cryptocurrency by market cap experienced a nearly 3% price increase on Thursday.
1. Declining Exchange Supply and Staking Frenzy
One significant development is the decreasing amount of ETH available on exchanges. According to Glassnode data, this trend defies recent price hikes, suggesting a lack of profit-taking from long-term holders (LTHs). This could indicate their anticipation of a new all-time high before selling. Additionally, the rising popularity of staking protocols, where users earn rewards for locking up their ETH, might be contributing to the dwindling exchange supply.
2. Spot ETH ETFs and Influx of Billions
The long-awaited launch of spot ETH ETFs adds another layer of optimism. The Securities and Exchange Commission’s (SEC) potential approval on July 4th has investors excited. Galaxy Research predicts a staggering $5 billion inflow within the first month of these ETFs, further fueling a potential price rally. With a portion of the ETH supply already locked in staking and DeFi protocols, the impact on price could be more pronounced compared to Bitcoin ETFs.
3. Technical Analysis: Breaking Through Resistance
While the price hovers around $3,450, overcoming a crucial hurdle is necessary for a sustained rise. The $3,629 resistance level has proven challenging for bulls in recent weeks. A successful breach of this barrier could pave the way for ETH to test the next resistance at $3,829. However, technical analysis also highlights a support level of $3,300. Failing to hold this level could lead to a dip toward the May 20th Fair Value Gap, with the $3,203 support acting as a potential safety net.
Conclusion
With a combination of declining exchange supply, the anticipation of spotting ETH ETFs, and bullish technical indicators, Ethereum seems poised for a potential price surge. Overcoming the $3,629 resistance level will be a crucial step in validating this bullish thesis. However, investors should be mindful of potential setbacks, such as outflows from Grayscale’s Ethereum Trust and the absence of staking features within ETFs.
