Ethereum price remains in a technical bear market after crashing by over 40% from its highest level this year, even as ETF inflows continue and exchange supply continues to plummet. This article explores why the ETH price may rebound soon and why exchange supply is plunging.
Ethereum Price Stuck in a Bear Market as Supply in Exchanges Falls
Third-party data shows that the supply of Ethereum tokens in exchanges has been in a strong freefall in the past few weeks and is now at the lowest level on record. As a result, the exchange balances have dropped to 8.4% of the supply, well below Bitcoin’s 14.8%.
There are a few reasons why this supply crash is happening. First, investors are continuing to stake their tokens, a move that removes tokens from exchanges. Data compiled by StakingRewards shows that the staking market capitalization stands at over $105.12 billion, with the staking ratio rising by 4.46% to 29.56%.
Second, demand for Ethereum ETFs remains strong, with cumulative inflows since their approval rising to over $12.8 billion. These funds now hold ~$18.94 billion, which is equivalent to ~5.20% of the market capitalization. The biggest Ethereum funds are by companies like BlackRock, Grayscale, Fidelity, and Bitwise.
Third, Ethereum treasury companies are still loading up their holdings. Tom Lee’s BitMine Immersion has continued accumulating ETH tokens. The company has bought 331,064 coins over the last 30 days, bringing its total holdings to 3.7 million, equivalent to over $11 billion.
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All these companies now hold tokens worth over $16 billion, a trend that may continue to rise, especially given the ongoing BitMine accumulation. Most of these tokens are held in cold storage, while the rest are held in staking accounts.
Meanwhile, Ethereum layer-2 networks like Arbitrum, Base, and Polygon affect the Ethereum supply, as transactions are settled using the ETH token.
Looking ahead, the Ethereum price has numerous catalysts, including its growing ecosystem and market share in areas like Decentralized Finance (DeFi), Real-World Asset (RWA) tokenization, and non-fungible tokens (NFTs), especially after the Fusaka upgrade.
Indeed, recent data shows that its market dominance in key areas is growing despite the growing number of layer-2 and layer-1 networks in the crypto industry, including the recently launched Monad and Cardano’s Midnight.
Ethereum Price Technical Analysis
The daily timeframe chart shows that the ETH price has come under pressure over the past few months, moving from a high of $4,962 in August to the current $2,950.
On the positive side, the ETH price has formed a falling wedge pattern, a pattern composed of two converging trendlines. It has already moved above the upper side of the wedge and is now attempting to retest it.
Therefore, this pattern suggests the token will likely have a strong bullish breakout in the coming days, potentially reaching the key resistance level at $3,385, its lowest level on August 3. A move above that level will signal further gains, potentially to the psychological level at $4,000.
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