Key Points

Only 11% of Ethereum’s total supply is currently available for active trading.
Despite a 57% increase in Ethereum’s value in 2024, investors are showing reluctance to part with their holdings.

Investors looking to buy Ethereum (ETH) may be struggling to find sellers.

This is due to the fact that only a small portion of Ethereum’s total supply is available for active trading.

Ethereum’s Supply Crunch

Ethereum has had an impressive start to 2024, gaining nearly 57% year-to-date (YTD).

This, along with the prospect of a spot ETF, has made Ethereum a hot commodity in the crypto market.

However, the issue lies not with demand, but with supply.

Data analysis shows that Ethereum reserves on exchanges have dropped to new lows.

Only about 11% of the total supply is available for active trading, down from 15.8% this time last year.

If this trend continues, the supply crunch could worsen.

Typically, such shortages can help boost prices in the long run if demand remains strong.

Despite the supply drop throughout 2022 and 2023, Ethereum underperformed due to uncertainties in the bear market.

However, with improving sentiment towards cryptocurrencies and bullish catalysts like spot ETFs, the desire to acquire Ethereum could increase.

Whale transactions, those worth over $100k, have also increased recently despite a price correction.

This has led to an increase in the number of wallets holding between 1,000 to 10,000 coins.

Technical indicators show that the Relative Strength Index (RSI) has moved above the neutral 50 line for the first time since mid-March.

If it moves above 60, this could consolidate bullish sentiments and pave the way for Ethereum’s rise towards $4,000.

However, the On Balance Volume (OBV) has failed to make higher peaks like price and has moved sideways in the last 10 days.

This suggests that the uptrend might stall.

The Moving Average Convergence Divergence (MACD) is at risk of going below the signal line in the next few days.

Such an event would strengthen bearish narratives.

On the other hand, a move above zero could aid in further price gains.