Ethereum Faces Bearish Pressure Amid Supply Contraction

Ethereum Faces Bearish Pressure Amid Supply Contraction – Insights on Future Movements

Ethereum (ETH) is currently experiencing significant selling pressure as market uncertainty escalates. With ongoing weak sentiment and a tightening price structure, analysts are raising concerns about a potential bearish market cycle. However, recent on-chain data suggests a decrease in available ETH on exchanges, which might influence price actions positively if demand stabilizes.

Key Takeaways

Ethereum is under renewed selling pressure, indicating potential entry into a bear market.
A descending triangle formation in price structure reflects bearish sentiment.
On-chain analysis reveals a reduction in Ethereum's supply on major exchanges, suggesting potential for a bullish turnaround if demand increases.
Holding the support level at $2,800 is crucial for future price movements.
Ethereum continues to consolidate around the $2,930 level, but downside risks remain.

Ethereum Faces Bearish Pressure Amid Supply Contraction – Insights on Future Movements

Current Market Conditions for Ethereum

Ethereum is grappling with intensified selling pressure as market uncertainties escalate and confidence wanes within the broader cryptocurrency sector. Following weeks of fragile price behavior and repeated attempts to recover, ETH has struggled to generate sustained demand, prompting a growing number of analysts to indicate this might represent the onset of a bear market.

Volatility continues to run high while sentiment appears weak, with traders displaying caution in committing their capital as the risks of price declines become more apparent.

Recent analysis from CryptoQuant offers insight into these concerns. Ethereum’s price structure has formed a descending triangle, a pattern typically seen during distribution phases, not accumulation phases. The price remains confined beneath a clear downtrend line, with key moving averages acting as resistance, hampering any upward momentum. This pattern indicates that sellers are still in charge, even though prices are trying to reach stability.

Historically, this technical formation heightens the likelihood of downward price movement. The $2,800 mark has emerged as a vital support area for Ethereum, which, if broken, could indicate a broader bearish trend, leading to accelerated losses as stop-loss orders are activated.

On-Chain Supply Data and Its Impact

Despite the visible pressures on Ethereum’s price, on-chain data paints a more complex picture. Insights from CryptoOnchain reveal a notable decline in the amount of ETH available for sale on major exchanges, particularly on Binance. The Ethereum Exchange Supply Ratio on Binance has plunged to 0.032, its lowest level since September 2024, demonstrating a significant reduction in liquid supply amidst ongoing price weaknesses.

Ethereum Exchange Supply Ratio | Source: CryptoQuant

This decline indicates that market players are moving their ETH off exchanges into self-custody, often seen as a sign of long-term investment rather than an indication of imminent selling. Fewer coins on exchanges alleviate the immediate selling pressure that often leads to downtrends. This trend is particularly interesting, as it arises while Ethereum remains within a bearish technical setup.

The disparity between technical signals and on-chain data is becoming increasingly significant. From a technical standpoint, the descending triangle and consistent resistance suggest caution. Yet, decreasing supply on exchanges raises the possibility of a supply-driven rebound if demand starts to stabilize. If buyers defend the critical $2,800 support zone successfully, even small inflows could greatly impact prices due to diminished liquidity.

The market currently stands at a pivotal point. A strong move above the downtrend line would reinforce the idea that accumulation is prevailing over distribution, shifting the current bearish narrative.

Ethereum's Consolidation Amid Ongoing Bearish Structure

Currently, Ethereum trades around the $2,930 mark on the daily chart as it continues to consolidate after a lengthy decline from its late-summer highs. The overlying structure remains weak technically, as prices have been making lower highs and lower lows since failing to stay above the $4,500–$4,800 range earlier.

ETH consolidates around key level | Source: ETHUSDT chart on TradingView

From a trend perspective, Ethereum remains capped below essential daily moving averages. The quicker moving average has sharply turned down and still acts as immediate resistance, while the 111-day and 200-day simple moving averages sit higher, converging around the $3,400–$3,600 range. This multi-layered resistance indicates that any attempts to rise may encounter significant selling pressure unless momentum improves considerably.

Recent price action showcases indecision rather than a genuine recovery. Ethereum has been fluctuating within a tight range of roughly $2,850 to $3,050, a sign of short-term stabilization but not a confirmed reversal. Trading volume over this period supports this view, with initial selling spikes dominating the price drop and subsequent rebounds failing to attract strong buyer participation.

Technically, the $2,800–$2,900 range is crucial. Holding this zone allows for the possibility of base-building, but a decisive breakdown could lead to a deeper retracement. To improve the overall structure, Ethereum must reclaim the $3,200–$3,300 levels and establish acceptance above its declining daily moving averages.

Featured image from ChatGPT, chart from TradingView.com