The value of Ethereum skyrocketed to $3,663 on March 26, marking a 20% increase from the lowest point reached earlier in the month on March 19. Market data indicates that investors are feeling more optimistic as the Bitcoin halving approaches.
Last week, Ethereum came close to dropping below $3,000 following a sell-off after the Dencun Upgrade. However, with the Bitcoin (BTC) halving on the horizon, on-chain data reveals a significant shift in sentiment among ETH investors.
As the countdown to the Bitcoin halving reaches 30 days, investors have moved 200,000 ETH into long-term storage, anticipating potential impacts of the upcoming event. Despite setbacks such as delays in Ethereum ETFs and sell-offs post Dencun Upgrade, ETH price has seen a recovery with a 20% increase on the weekly chart.
Data from on-chain trends suggests that the positive momentum in the ETH market can be attributed to strategic moves made by investors to prepare for the Bitcoin halving scheduled for April 20. Since the 30-day mark was hit on March 19, Ethereum investors have adopted a more conservative trading approach.
Cryptoquant’s exchange reserves metric tracks the number of coins held in crypto exchange wallets and trading platforms, serving as an indicator of investors’ tendencies to sell or hold out for profit-taking opportunities. As of March 19, investors held 14.2 million ETH on exchanges, but this number has decreased by 200,000 ETH over the past week.
A decline in exchange reserves often leads to a positive impact on the asset’s price, signaling that investors are holding out and may be hesitant to sell. The correlation between this decrease and the Bitcoin halving countdown suggests that the upcoming event is a key driver behind the change in Ethereum investors’ sentiment.
With over $740 million worth of ETH coins moved out of the market supply into long-term storage options or staking contracts in the past week, the demand for ETH remains steady while the supply diminishes, putting upward pressure on prices. As a result, ETH price has already surged by 20% since the outflows began on March 19.
If existing ETH investors continue to adopt a conservative outlook, the price recovery phase for Ethereum could accelerate further in the coming days. Additionally, insights from the decline in ETH market supply indicate that Ethereum price may be on track to reach $4,000 ahead of the Bitcoin halving.
While there is a major resistance cluster at $3,750 for ETH, the majority of investors who bought ETH within the current price range are in profitable positions. This suggests that they may be reluctant to sell, potentially leading to a rebound towards $4,000 as anticipated.
In the event of a market downturn, bulls are likely to defend the psychological support level of $3,500. Overall, with the Bitcoin halving approaching and positive trends in the ETH market, Ethereum price forecast remains optimistic for the future.