Ethereum has experienced a period of relative calm over the weekend, with prices showing signs of stability following last week’s volatility. The cryptocurrency has managed to reclaim the $4,100 level, and many analysts are now looking at the $4,000 mark as a crucial support level. If bulls are able to maintain this level of support, it could pave the way for a strong surge in the market in the coming days, potentially setting the stage for Ethereum to retest higher price levels.
One key report by CryptoQuant has added weight to this positive outlook for Ethereum. The report highlights that Ethereum supply on spot exchanges continues to decline, indicating that investors are moving their ETH into self-custody or staking, thereby reducing the available sell-side liquidity on exchanges. Historically, such reductions in exchange reserves have often preceded significant rallies, as increased demand absorbs the decreased supply.
Despite the supportive data, analysts caution that the real catalyst for Ethereum’s price movement remains demand. Without a strong influx of new buyers, supply-side reductions alone may not be sufficient to drive ETH prices significantly higher. Therefore, the next few days will be crucial in determining Ethereum’s direction, with the ability to hold above $4,000 serving as a key indicator of whether a new rally is on the horizon.
Looking at the long-term bullish setup for Ethereum, recent outflows of ETH from spot exchanges are primarily linked to new purchases, where investors buy ETH and transfer it immediately to self-custody or staking. This behavior reduces sell-side liquidity and lays the groundwork for potential price appreciation over time. Historical patterns have shown that such periods of falling reserves often precede market rallies, indicating that Ethereum could be gearing up for a significant long-term move.
In terms of price action details, Ethereum is currently attempting to stabilize after a sharp drop below $4,000, with the latest charts showing a modest recovery to around $4,131. The bounce comes after ETH briefly tested lows near $3,900, suggesting that buyers are stepping in to defend the critical support area. However, overhead resistance between $4,250 and $4,400 poses a challenge for bulls, with a clean break and consolidation above these levels needed to regain momentum and target higher price ranges toward $4,600.
In conclusion, Ethereum’s price structure remains fragile, with the cryptocurrency facing both selling pressure and strong demand. If ETH can maintain support above $4,000 and break through resistance levels, a recovery phase may be on the horizon. On the other hand, a failure to sustain the rebound could expose Ethereum to retesting lower support zones. The next few sessions will be crucial in determining Ethereum’s short-term trend and potential for further price movements.