Ethereum’s supply to the exchange has fallen to its lowest level since November 2015, with only 8.97 million ETHs available
According to a March 21 analysis by Santiment, the decline was primarily due to the growing popularity of decentralized finances and staking. Selling pressures have fallen as more holders keep their assets off rather than more holders keep them on the exchange. Ethereum’s (ETH) exchange supply has declined by 16.4% over the past seven weeks, indicating a long-term accumulation trend.
https://twitter.com/santimentfeed/status/1902851984182669545?s=46&t = nznxks3debx8jihnzhmzw
However, this supply squeeze has not yet made a profit on Ethereum prices at least. ETH has plummeted 47% from its December high to $4,105 to $1,990 on March 21, becoming one of the worst major cryptocurrencies.
On-chain and technical indicators suggest even more downsides. Standard chartered analysts have recently reduced their ETH price target from $10,000 to $4,000 by the end of the year, citing increasing competition with other networks, particularly Ethereum Layer-2.
Due to the low fees, Layer 2 networks attract more users and reduce mainnet activity. According to data from Defilama, the volume of the past week processed by the Ethereum-based Dex protocol was $9.8 billion, of which $5.67 billion was processed by Arbitrum (ARB) and base alone.
Ethereum’s monthly DEX volume will drop from $92 billion in December to $82 billion in February, with even smaller volumes expected in March. The decline in mainnet usage has affected Ethereum’s fee revenues, an important part of its economic model. Ethereum’s fee revenues have dropped significantly from just $46 million in February, from $218 million in December.
Thanks to Dencun upgrades, trades are not expensive thanks to Dencun upgrades, which now reduces 95%, but Ethereum’s revenues continue to decline. Ethereum’s total locked value fell from $76 billion in December to $46 billion in press time.
Ethereum’s potential lifelines can come from staking the funds traded on exchanges. The New York Stock Exchange and the Chicago Commission option exchange filed a request with the Securities and Exchange Commission to allow staking of the Ethereum ETF. Institutional interest is still low given that the Ethereum Spot ETF saw a $370 million spill the previous month.
Technically, Ethereum continues to decline and faces resistance at $2,042. The 50-day moving average serves as a barrier, with the Bollinger band showing low volatility, suggesting integration.
ETH Technical Analysis. Credit: crypto.news
The ETH is recovering from its sold condition, but according to the RSI of 41.22, it lacks significant momentum. A weak volume indicates trader uncertainty, while a small increase indicates some accumulation.
The next goal is $2,163 and $2,370 if your ETH exceeds $2,042. If $1,986 is not held, it could decrease to $1,714, where previous purchase rights emerged.
