ETH Supply Squeeze Imminent As Exchange Supply Falls

Key takeaways:

• Ether’s bull flag confirmation on the daily chart targets 34% gains to $6,100.

• The percent of ETH supply held on exchanges has dropped to 12% for the first time since 2016.

• Depleting ETH supply on exchanges points to a “supply squeeze” and long-term accumulation.

Ether (ETH) price registered a multi-year high of $4,792 on Thursday after a 45% rise from its Aug. 3 low at $3,354. The price is now consolidating below its $4,867 all-time high after validating a classic bullish continuation pattern.

Can Ether’s price rise 34% in the next few days?

Ether’s “bull flag” hints at $6,000

ETH rallied more than 126% between June 22 and Aug. 14 to reach a multi-year high just below $4,800. The latest rally saw the price breach the resistance provided by the upper boundary of a bull flag at $3,770 on the daily chart, confirming a bullish breakout.

Related: BlackRock Bitcoin, Ether ETFs buy $1B as BTC price mostly fills CME gap

A bull flag is a continuation pattern that occurs after a significant rise, followed by a consolidation period at the higher price end of the range.

Ether has confirmed a ​​”textbook bull flag” in the daily time frame, said trader Mister Crypto in an earlier analysis on X. 

“The target is $6,000.”

As Cointelegraph reported, bulls are now focused on pushing ETH above a key resistance at $4,700. Such a move could potentially lead to the next leg up for Ether, measured at $6,150 or 34% from its current price level.

However, it is important to note that the success rate of a bullish pennant is only around 54%, which makes it one of the least reliable patterns.

More ambitious projections have been made by other analysts, citing increasing institutional demand through spot Ethereum ETFs and ETH treasury companies, putting ETH’s top between $12,000 and $30,000.  

Percentage of ETH on exchanges drops to a new low 

ETH percent supply on exchanges has dropped to a nine-year low, falling to 12.36% for the first time since July 2016, Glassnode data shows.

Diminishing Ether supply on exchanges may signal an incoming price rally fueled by a “supply shock,” which occurs when strong buyer demand meets decreasing available ETH.

“Only 18.5M Ethereum left on exchanges,” said popular trader Merlijn The Trader in a Friday post on X. 

The trader attributed this to aggressive buying by ETF issuers and Ethereum treasury companies, adding:

“When scarcity meets demand, price doesn’t go sideways. Supply squeeze incoming.”

Coupled with over 35.7 million ETH staked (30% of supply), according to data from UltraSound Money, this “supply squeeze” signals strong holder conviction and reduced sell-side pressure.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.