Ethereum Faces Resistance at $3,220 Despite Supply Crunch
The price of Ethereum recently encountered resistance at $3,220 following a recovery from a low of $3,021
Exchange reserves for ETH have reached multi-year lows in 2024, indicating a potential shortage in supply
Technical analysis reveals mixed signals, showing bullish potential but lagging behind Bitcoin
Currently, the price trades below the 100-hourly Simple Moving Average, with significant resistance at $3,250
The ETH/BTC pair exhibits weakness, with subsequent support levels anticipated between 0.028-0.026
Ethereum’s price has consistently remained above the $3,100 threshold, despite facing technical resistance around $3,220. Recent statistics reflect a significant drop in exchange reserves, which have declined to multi-year lows in early 2024, hinting at a probable shortage of supply in the marketplace.
The second-largest cryptocurrency by market capitalization has recently seen a price decrease below $3,150, establishing a local bottom at $3,021. Bulls swiftly intervened to provide support, promoting a recovery beyond the $3,120 level.
Since the peak of the 2017-2018 bull market, Ethereum’s exchange reserves have experienced considerable fluctuations. The metric reached another peak during the 2020-2021 phase, primarily fueled by the broadening DeFi ecosystem and increasing interest in Ethereum-based initiatives.
A notable decline in exchange reserves commenced in late 2021, marked by large withdrawals. This trend has persisted into 2024, with reserves remaining at historically low levels. Analysts suggest this may reflect a shift in investor behavior, with more individuals transitioning their assets into long-term storage.
Technical analysis presents a complex market structure, with Ethereum trading below both $3,200 and the 100-hourly Simple Moving Average. A bearish trend line has been established with resistance at $3,250 observed on the hourly chart.
The price action illustrates immediate resistance around the $3,150 level, with a more prominent barrier near $3,220. This area aligns with the trend line and the 50% Fibonacci retracement level of the recent downtrend from $3,425 to $3,021.
Market Analysts Split on Ethereum’s Near-Term Outlook
Trading information indicates that Ethereum must break through the $3,270 resistance level to foster a more definitive upward trajectory. Crossing above this threshold may pave the way towards $3,350, with the possibility of further movement toward $3,420 or even $3,500.
On the downside, initial support is present near $3,050, with a critical support threshold at $3,020. A breach below these points could activate additional selling pressure, potentially driving the price toward $3,000 or even $2,950.
The correlation between Ethereum and Bitcoin has unveiled some troubling patterns. While Bitcoin continues a steady upward trend, the ETH/BTC pair has been creating lower lows, suggesting diminished relative strength against Bitcoin.
Market analyst Anup Dhungana has pinpointed the forthcoming technical support range for the ETH/BTC pair as between 0.028 and 0.026. A rebound from these areas could potentially rekindle broader interest in Ethereum and the larger altcoin market.
Notwithstanding the mixed signals, certain analysts maintain a positive outlook. Crypto Ceaser, a notable market commentator, recently emphasized Ethereum’s price rebound as a significant opportunity, hinting that the asset is presently undervalued.
$ETH – #Ethereum rebounded as anticipated. This was a great opportunity. Let’s go.
In my view, Ethereum is significantly undervalued. I believe we will witness new ATH’s soon. pic.twitter.com/ljMa1lEpJO
— Crypto Caesar (@CryptoCaesarTA) January 28, 2025
Historical trends indicate that decreasing exchange reserves frequently align with price stabilization at elevated levels. This trend notably arose from 2022 onward as dwindling reserves were parallel to stronger price support.
The hourly MACD indicator presently shows momentum in the bearish zone, while the RSI sits below the 50 mark, pointing towards short-term technical fragility.
Recent price shifts have yielded a modest 2.3% increase within the last 24 hours, although Ethereum still reflects a 3.3% reduction over the weekly period.
The ongoing trend of withdrawals from exchanges implies a possible supply deficit, which typically exerts upward pressure on prices during increased demand.
Current market information reveals the primary resistance setting up at $3,270, with support formed around the $3,020 area.
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