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Ethereum Ready For A Major Rally? ETF Approval Sees $3 Billion in ETH Heading From Exchanges

Last Updated June 3, 2024 3:04 PM
Nikola Lazic
Last Updated June 3, 2024 3:04 PM

Key Takeaways

  • Ethereum is poised for a rally, a potential breakout above $4,000.
  • Significant Ethereum withdrawal from exchanges suggests a supply squeeze.
  • Ethereum forms a symmetrical triangle, hints at new price highs.

Ethereum is currently priced around $3,800 and shows signs of a potential major rally, with a breakout above $4,000 appearing likely. Recent on-chain data reveals a significant increase in Ethereum being withdrawn from exchanges—approximately 800,000 ETH valued at around $3 billion—following the approval of a spot Ether ETF last week. 

This trend suggests a potential supply squeeze that could push ETH prices higher, as lower exchange reserves indicate fewer coins are available for sale, with more investors opting for self-custody.

Ethereum On Exchanges On All-Time Low

Following the approval of the Ethereum Spot ETF on May 24, 2024, more than 800,000 Ethereum, valued at approximately $3 billion, were withdrawn from exchanges over eight days. The highest negative Netflow  of 472,154 ETH was on May 30. 

ETH Netflow | Source: CryptoQuant

CryptoQuant suggests that two main groups may drive this substantial movement of Ethereum off exchanges. The first includes large-scale investors, or whales, who are likely anticipating a price increase due to the new ETF, aiming to capitalize on the expected market upturn. The second group consists of institutions preparing for the launch of the spot ETF, likely to satisfy the forecasted investor demand once the product is available.

ETH All Exchange Reserves | Source: CryptoQuant

The number of ETH being held on exchanges  plummeted to an all-time low of 12,968,931 from a high of 13,821,446 on May 26, which is 852,515 ETH. 

This pattern echoes the activity observed after the approval of the Bitcoin Spot ETF and foreshadows further price spikes. 

ETH Price Forms Symmetrical Triangle 

Ethereum‘s price climbed sharply from a descending trendline on May 17, rising parabolically to hit $3,800 by May 23. This marked a 32% increase from its low of $2,870 on May 13, indicating the start of a new uptrend.

On the hourly chart, Ethereum’s price has formed a symmetrical triangle starting from its May 23 high just below $4,000. As the price neared the triangle’s apex, it encountered resistance, and it was possible to break below support.

ETHUSD | Credit: Nikola Lazic/Tradingview

Should this downward breakout occur, we might anticipate a bearish trend with the price potentially dropping to a new short-term low of $3,550. This decline would represent the completion of wave 4, after which we could expect a rally toward a new all-time high.

Conversely, if the price successfully breaks through the triangle’s upper resistance, it would signal the end of corrective wave 4 and the beginning of an upward trend for wave 5.

In either scenario, Ethereum’s outlook suggests a potential rise to a new yearly high and even to a new all-time high exceeding $5,000.

Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
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