A recent breakthrough in Ethereum (ETH) has the potential to change the course of the market. For the first time, the Ethereum exchange balance has turned negative, indicating that more tokens are being withdrawn from trading platforms than deposited. This structural shift in supply dynamics has analysts identifying it as a crucial bullish indicator for the upcoming market rally. Cas Abbe shared a new report indicating that Ethereum’s exchange flux has fallen into negative territory for the first time on record. He suggests that the latest development could be positive for ETH, as it indicates reduced selling pressure and increasing investor confidence.
Throughout history, the exchange balance metric has stood out as one of the most transparent indicators of investor behavior. When balances increase, it usually indicates growing selling pressure, as traders transfer coins for liquidation reasons. On the other hand, a decline suggests that coins are being moved into private wallets, which are generally less prone to being sold. The analyst’s chart showcases a significant and rapid decline in Ethereum’s exchange balances over the past few years, reaching this unprecedented low point. Billions worth of ETH have been withdrawn from centralized platforms, aligning with the asset’s movement toward a target exceeding $5,500. This shows a distinct decrease in liquid supply amidst already increased demand.
Abbe emphasizes that the significance of this decline is paramount. He observed that peaks in the crypto market typically happen following a surge in inflows into these centralized platforms, rather than when balances are declining to new lows. In other words, Ethereum might be set for accumulation rather than a sell-off. With the easing of selling pressure, long-term holders are gaining more influence over supply, setting the stage for a possible surge in price momentum. If history serves as a reference, Abbe indicates that the declining exchange balance might pave the way for Ethereum’s upcoming surge. In a post on X, ETH has formally emerged from a long-term wedge formation that has limited price movement since 2021. The accompanying chart illustrates ETH finally breaking through resistance after years of sideways trading.
Despite the recent fluctuations in Ethereum’s price, it will achieve a new all-time high in the near future. According to the analyst’s prediction, the wedge breakout will target the $7,000 range, which would indicate a possible 62% increase in price from the current levels over $4,300. If the current momentum continues, the cryptocurrency may surpass the $7,000 mark.