Ethereum plunged by a record 26% in a month

A significant decline in Ethereum stocks ETH $1,820.43 Bridged Ether (StarkGate) 1.12% Market capitalization $0.16 billion VOL. 24 hours $0.65 billion on crypto exchanges has sparked a new wave of optimistic forecasts among analysts and traders. According to the Santiment analytical platform, the volume of Ethereum on exchanges has dropped to 8.97 million coins, the lowest level since November 2015. Over the past month, the digital asset has fallen in price by 26%, and its supply on exchanges continues to decline daily as more and more crypto traders switch to cold storage.

Such an outflow is often considered a signal of a possible price increase, a phenomenon that is called a «supply shock» in the market. However, the rate increase will only be possible if demand is stable or growing. A similar situation has already been observed with bitcoin BTC $94,788.02 Bitcoin -0.17% Market capitalization $1.88 trillion VOL. 24 hours $0.9 billion in January: back then, BTC reserves on exchanges fell to a seven-year low, which preceded the price jump to $ 109,000.

Some traders see the dynamics of Ethereum as a prerequisite for a similar scenario. Thus, a popular crypto trader under the pseudonym Crypto General noted that «it's only a matter of time before a big supply shock». Another analyst, Ted, is confident that a decrease in the ether available on exchanges will lead to «price wars» among buyers.

In general, the community is expecting that the accumulation of Ethereum can raise its price to $ 8−10 thousand. This is significantly higher than the historical high of $ 4,878 reached in November 2021. However, there are also a number of signals that prevent analysts from being completely immersed in optimism.

In particular, the ratio of Ethereum to Bitcoin is currently at its lowest level in five years. Over the past month, the ETH rate has fallen by 26% and is currently trading at $ 1,971, according to CoinMarketCap. In addition, over the past 12 days, investors have been actively withdrawing funds from spot ETFs on Ethereum, with the total outflow reaching $ 370.6 million.

Renowned analyst Scott Melker, known as the «Wolf of All Streets,» summarizes the situation harshly: «Either Ethereum will bounce back now and this will be a historic bottom, or it’s over.»