Ethereum price has crashed into a bear market after plunging by over 22% from its highest level this year. ETH traded at $3,850 on Friday, down from its year-to-date high of $4,958. This article highlights the top reasons the ETH price may be ripe for a strong bullish breakout soon.
Ethereum Price Has Strong Technicals
The first main reason the Ethereum price may surge soon is its strong technicals, especially on the daily chart.
This chart shows that the token has formed a bullish flag pattern, consisting of a vertical line and a descending channel, resembling a hoisted flag. It is now forming a flag pattern, suggesting a bullish breakout is possible.
Ethereum price also remains above the 200-day Exponential Moving Average (EMA). Most notably, the ongoing pullback could be part of the handle section of the cup-and-handle pattern that has been forming since December last year.
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Therefore, the most likely Ethereum price forecast is bullish, with the initial target being at the year-to-date high of $4,965. A move above that level will lead to further gains, reaching the extreme overshoot level of the Murrey Math Lines at $5,625. A move below the $3,500 support level will invalidate the bullish outlook.
Ethereum Could Have a Supply Squeeze
The other main catalyst for Ethereum is that the supply in exchanges is in a strong downward trend this year, a sign that investors are not selling and that many are moving them to self-custody.
Data compiled by CryptoQuant shows that the supply has dropped to 15.9 million from over 20 million in January this year. There were over 27 million tokens in exchanges in 2022.
One reason Ethereum on exchanges is falling is that demand from American investors has continued to rise, as evidenced by ETF inflows, which have jumped to over $14 billion today.
Another reason why Ethereum in exchanges has dropped is that companies like BitMine, SharpLink, and The Ether Machine have continued buying these coins. They now hold over 3.6 million tokens, likely in cold wallets.
Dominant Market Share in Key Industries
The other main catalyst for Ethereum’s price is its dominant market share in key industries like decentralized finance (DeFi) and stablecoins.
Ethereum has a total value locked (TVL) of over $176 billion in total value locked (TVL) and 1,656 protocols. It has a 72% market share, with Solana at 8.3% and BSC at 4.95%.
Ethereum also has a significant market share in the stablecoin industry, with over $163 billion in assets, giving it a 53% dominance. It is followed by Tron and Solana. It is also the biggest chain in the RWA industry with over $7 billion in assets.
READ MORE: Here’s Why Solana Price Has Crashed and What’s Next
