Ethereum’s Supply Shrinks: Why ETH Price Remains Stagnant Below $3,390
Ethereum (ETH) continues to capture attention as it consolidates between $3,000 and $3,390. Despite decreasing supply and growing institutional adoption, ETH struggles to break past its resistance level. So, what’s happening?
Institutional Accumulation is Shrinking Ethereum Supply
Large institutional players are actively reducing Ethereum’s liquid supply. For example, Bitmine recently staked 86,848 ETH, worth $277.5 million. This brings its total staked holdings to an impressive 1.77 million ETH, valued at approximately $5.66 billion. Similarly, Exchange Traded Funds (ETFs) have accumulated nearly 158,545 ETH since late December, absorbing $520 million worth of Ethereum.
This consistent accumulation is tightening the market supply. However, the immediate price reaction remains limited, leaving short-term traders disappointed. Long-term holders seem unfazed by short-term price swings, prioritizing staking yield over volatility.
Price Consolidation: A Tug-of-War Between Buyers and Sellers
Ethereum price behavior shows a clear range, with buyers defending $3,000, while sellers dominate near $3,390. This ongoing oscillation creates a price compression, making breakouts elusive. The lack of aggressive selling and cautious buying reflects market hesitation rather than bearish weakness.
Momentum indicators also support this consolidation narrative. Ethereum’s Relative Strength Index (RSI) recently drifted from the low-50s to the mid-40s, signaling a decline in buying strength. There is no bullish divergence in the RSI, which aligns with the ongoing market stalemate.
Exchange Outflows Signal Confidence Among Holders
Ethereum’s spot flow analytics show consistent exchange outflows. As of now, daily net outflows stand at -$72.6 million, underscoring growing confidence among Ethereum holders. By moving ETH into self-custody wallets, investors are signaling reduced fear and strengthening conviction in Ethereum’s long-term value.
However, this tightening supply has yet to trigger a significant price response, frustrating speculative traders. But historically, sustained outflows can lead to substantial upward supply-driven price moves.
Derivatives Market and Leverage Insights
The derivatives market provides additional clarity. Funding rates are slightly positive, around 0.0042, showing a rebound in leverage activity. However, leveraged participation remains muted, as both buyers and sellers seem unwilling to take significant risks. The restrained activity in the derivatives market further delays a potential breakout, keeping Ethereum locked in its consolidation range.
Will ETH Break Key Resistance at $3,390?
For Ethereum to break free from its consolidation range, a sustained move above the $3,390 resistance level is essential. This would need to be supported by stronger momentum indicators and expanding leverage activity. Until then, Ethereum’s price behavior will likely continue oscillating, dominated by cautious trading on both sides.
A Recommendation for Crypto Enthusiasts
If you’re looking to participate in Ethereum’s ecosystem through staking, consider using Kraken, a trusted platform offering ETH staking with competitive rewards. Staking not only helps you earn passive income but also contributes to reducing Ethereum’s liquid supply.
Stay tuned to the latest trends in Ethereum and the crypto market as this ongoing consolidation could set the stage for a future breakout.
