Ethereum has been inexpensive since February, as it was trading below its overall cost basis at $2.3k. More holders found themselves at a loss, and the recent rally to $1,920 followed by a subsequent reset lower indicates that sellers continue to maintain the upper hand in the market. Source reported that the realised price bands indicate a potential price decline to $1.15k if the 2022 bear market cycle were to repeat. Despite being perceived as inexpensive, spot ETF outflows amounting to $70.7 million on Friday, July 24th, interrupted a five-day sequence of inflows that commenced on July 16th.
Source warned that stalled momentum could indicate a continuation of a bearish trend. Certain on-chain metrics indicated a trend of organic growth alongside a decrease in speculative excess. XWIN Japan noted a decline in Exchange Reserves from 5 million ETH in mid-2025 to 3.8 million at the time of writing. This indicates both the accumulation by holders and a reduction in selling pressure within the market. Additionally, the market price is below the realised price, creating advantageous conditions for long-term investors to acquire the leading altcoin at a reduced cost.
However, XWIN Japan observed that declining Exchange Reserves, in isolation, do not substantiate a definitive market bottom. Over the past quarter, Ethereum has exhibited a period of relative stability, noted crypto analyst. Median transaction fees were significantly lower, standing at 92% below the 90-day average, for instance. Yet, over the past week, these fees increased by 16%. New smart contract deployment experienced a remarkable increase of 190% relative to the 90-day baseline. Median tip fees experienced an increase of 86%.
The heightened contract deployment and tips indicated authentic short-term on-chain demand and activity. Leverage continued to exhibit a subdued state. Funding rates exhibited a cooling trend on Binance, while Open Interest experienced a decline from $15.06 billion at the beginning of June to $11.85 billion at the time of reporting. If the short-term increase in activity is maintained, and leverage remains manageable, a price increase fuelled by organic demand could be feasible.