- Ethereum price continues to consolidate after recording a new all-time high but is preparing to take off.
- There are three major reasons why ETH supply is quickly decreasing, which could propel prices higher.
- The governing technical pattern suggests that Ethereum is aiming to tag $6,300 next.
Ethereum price has been consolidating after the second-largest cryptocurrency registered a new all-time high on November 10. Although ETH has been moving sideways, a few factors suggest that the token may be preparing for a massive take-off.
Ethereum circulating supply depleting at rapid pace
Here are a few factors that are currently limiting the overall circulating supply of Ethereum, which could continue to drive ETH price higher to target bigger aspirations.
Over the past few years, Ethereum became the major player in terms of smart contract development on its network. A large majority of Ether is placed in smart contracts on the network, with nearly 27% of its supply, reaching $143 billion or nearly 32,000,000 ETH. Of the 27% of coins placed in smart contracts, 77% are locked in decentralized finance (DeFi).
ETH in smart contracts
The supply of Ether on exchanges is nearly reaching a three-year low, a trend that started in late 2020. Only 12% of the total supply of Ethereum is on exchanges, down from 17.3% at the start of the year. The low balance on exchanges suggests that investors are not planning to sell, which could dry liquidity and volatility for ETH.
ETH on exchanges
The actual circulating supply of Ethereum is fairly lower than commonly believed. Over 50% of the total supply of Ethereum has not been moved in over a year. Only 20% of ETH supply has been recorded as active since October 1.
ETH HODL waves
EIP-1550, which introduced a fee-burning mechanism removed over 1 million ETH in circulation in just three months after it was initiated, resulting in nearly 1% of the total supply burnt.
Ethereum price set sights on $6,300
Both the underlying fundamentals and technicals of Ethereum point to a bullish future. Ethereum price presented a cup-and-handle pattern, with a measured move of a 58% upswing toward $6,340 from the neckline of the governing technical pattern.
While ETH sliced above the neckline at $3,971 on October 20, the token has faced challenges with reaching the optimistic target. As long as Ethereum price stays above the neckline, the bullish forecast remains on the radar.
Investors should note that Ethereum price recently reclaimed the 21-day Simple Moving Average (SMA) at $4,373 as support, adding fuel to a potential recovery. The next obstacle for ETH to overcome is at the November 16 high at $4,553, then at the November 15 high at $4,757 before attempting to reach its record high at $4,880.
ETH/USDT daily chart
If a spike in sell orders occurs, Ethereum price will discover immediate support at the 21-day SMA at $4,373, then at the 50-day SMA at $4,279. Additional foothold will emerge at the 78.6% Fibonacci retracement level at $4,211, then at the November 23 low at $4,050.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
Bitcoin Weekly Forecast: BTC nosedives below $95,000 as spot ETFs record highest daily outflow since launch
Bitcoin price continues to edge down, trading below $95,000 on Friday after declining more than 9% this week. Bitcoin US spot ETFs recorded the highest single-day outflow on Thursday since their launch in January.
Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers
Bitcoin (BTC) slipped under the $100,000 milestone and touched the $96,000 level briefly on Friday, a sharp decline that has also hit hard prices of other altcoins and particularly meme coins.
Solana Price Forecast: SOL’s technical outlook and on-chain metrics hint at a double-digit correction
Solana (SOL) price trades in red below $194 on Friday after declining more than 13% this week. The recent downturn has led to $38 million in total liquidations, with over $33 million coming from long positions.
SEC approves Hashdex and Franklin Templeton's combined Bitcoin and Ethereum crypto index ETFs
The SEC approved Hashdex's proposal for a crypto index ETF. The ETF currently features Bitcoin and Ethereum, with possible additions in the future. The agency also approved Franklin Templeton's amendment to its Cboe BZX for a crypto index ETF.
Bitcoin: 2025 outlook brightens on expectations of US pro-crypto policy
Bitcoin price has surged more than 140% in 2024, reaching the $100K milestone in early December. The rally was driven by the launch of Bitcoin Spot ETFs in January and the reduced supply following the fourth halving event in April.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.