Ethereum (ETH) Supply Shock: $4,800 Price Target?
Key Takeaways
- Ethereum's supply on exchanges has sharply declined, returning to levels not seen since before June.
- Whales and institutions are aggressively accumulating ETH, scooping up $448.92 million worth.
Ethereum [ETH] has been trading within a consolidation range of $4,200 to $4,500 since reaching a local high of $4,600 a week ago. At the time of writing, the altcoin was trading at $4,408, following modest gains of 0.44% in the last 24 hours. Some investors have used this period to accumulate ETH.
Ethereum Supply on Binance Declines
According to CryptoQuant data, the Ethereum Exchange Supply Ratio (ESR) on Binance has fallen sharply from 0.041 to 0.037 in just two weeks. An analysis of this metric reveals significant accumulation.
Source: Cryptoquant
A decreasing ESR typically suggests that Binance investors are accumulating ETH. The recent dip has pushed the ESR back to its pre-June levels, potentially indicating that previous profit-taking has been absorbed by the market.
Historically, a declining ESR has preceded notable price increases. Reduced exchange liquidity limits sellers' ability to drive prices down. If the ESR continues to fall without a corresponding price drop, the market may be entering a new, institutionally-driven bull cycle.
Whale Activity Signals Confidence
In conjunction with the decreasing Exchange Supply Ratio, whale and institutional accumulation is intensifying.
On-chain data indicates that whales and institutions acquired $448.92 million in ETH. Notably, Bitmine purchased 69,603 ETH, valued at $300 million, from BitGo and Galaxy Digital.
Source: On-chain Lens
Additional whale wallets acquired significant ETH holdings: 12,692 ETH ($54.84M), 18,404 ETH ($79.45M), and 3,388 ETH ($14.63M). These purchases contributed to a negative Exchange Netflow for Ethereum for seven consecutive days, with only September 5th as an exception.
Aggressive accumulation by whales and institutions often signals strong market conviction, a bullish indicator.
Derivatives Market Shows Bullish Sentiment
With demand stabilizing, investors are strategically positioning themselves in the derivatives market.
CryptoQuant data shows that the Derivatives Taker Buy Sell Ratio has turned positive after a week of negative values.
Source: CryptoQuant
A positive ratio indicates buyers are more aggressive than sellers, signaling short-term bullish momentum.
A positive funding rate further reinforces this bullish sentiment, indicating that investors are largely bullish and taking long positions.
Momentum Indicators Lean Bullish
Ethereum's price is finding stability as whales and institutions continue to accumulate, according to analysis.
This accumulation has helped the altcoin's momentum recover. The Stochastic RSI has risen to 13 following a bullish crossover.
Source: Tradingview
The Relative Vigor Index (RVGI) has also made a bullish crossover, reaching -0.1117, which further supports the strength of the uptrend.
These indicators suggest buyer dominance and the potential for continued upward movement.
If large buyers continue to accumulate, ETH could break out of its consolidation pattern and potentially reach $4,800. Conversely, a resurgence of selling pressure could push ETH back down to $4,200.