Important points:
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Ether’s profitability indicators have fallen to levels that have historically marked the bottom for the region.
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Ethereum fees have increased by 83% weekly, indicating strong on-chain demand.
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ETH supply on exchanges is at a nine-year low, with $3,000 providing strong price support.
Ether (ETH)’s recent decline was halted at $3,000 as bulls aggressively defended this level. ETH has since recovered to current levels above $3,300, and on-chain and technical data make it increasingly unlikely that the price will fall further.
Ether traders realize losses
Ether’s spend return ratio (SOPR) has fallen to 0.96, according to on-chain data, suggesting ETH investors are selling at a loss.
This means that the ongoing correction in ETH price is being caused by traders who realized losses in panic and extreme fear.
Related: Ethereum flashes buy signal amid whispers of “massive bear trap”: Analyst
SOPR measures the profit or loss of spent ETH output by comparing the value when the coin was last moved and the value when it is used again.
Values below 1 indicate capitulation or a market bottom and may indicate a good time to buy.
Historically, this scenario has often preceded a price recovery. After Ether fell to $1,500 in April, the SOPR dropped to 0.86 and the price recovered 91% to $2,700 four weeks later.
As such, some investors viewed the drop to $3,000 as a buying opportunity.
Ethereum’s on-chain data suggests new demand
On-chain activity over the past seven days shows a positive picture. According to DefiLlama, Ethereum continues to expand its advantage over competitors, securing around 56% of the market’s total value lock (TVL).
More relevantly, network fees are rising to reflect increased demand for block space, reinforcing the strength of Ether’s price above $3,000.
Ethereum fees over the past seven days rose to $9.23 million on Friday, an 83% increase from the previous week. For comparison, BNB Chain’s revenue fell by 41%, while Solana’s fees rose by only 9.1%.
This divergence highlights Ethereum’s dominance in decentralized trading volume, which increased 22% in October, according to DefiLlama.
Decrease in ETH supply on exchanges
ETH supply on exchanges continues to decrease. According to data from Glassnode, ETH balances on the exchange decreased by 22% from 17 million ETH on August 24 to 13.14 million ETH on Friday, a nine-year low.
This indicator has declined sharply over the past seven days, with deposits to the trading platform decreasing by more than 31%. This decline is in line with the 14% decline in Ether price over the same period.
Declining ETH balances on exchanges indicate that there is less supply available for immediate sale.
ETH price is at strong support above $3,000
Data from Cointelegraph Markets Pro and TradingView shows that bulls are fighting to keep ETH price above major support zones, as shown in the chart below.
This ranges from $3,000 to $3,150, defined by the 100-week and 50-week simple moving averages (SMAs), respectively. These trend lines have supported prices since July.
However, a break below this level could result in the emergence of a first line of defense from the $2,800 support level, triggering a new downtrend. Below that, the bulls could retreat to the 200-week SMA near $2,500, where they can mount strong protection.
“We would like to see buyers step in and try to take control of the $3.2 million to $3.4 million area,” crypto analyst Skew wrote in a recent X post.
A decline below this level would be a “clear invalidation of ETH,” the analyst wrote.
Fellow analyst Krypto Patel wrote:
“It is important to hold the $3,000 support as it could trigger the next bullish wave.”
As reported by Cointelegraph, Ethereum traders are turning bullish, as evidenced by an increase in positive comments on social media, which is interpreted as a good sign that ETH price is back on track.
This article does not contain investment advice or recommendations. All investment and trading moves involve risk and readers should conduct their own research when making decisions.