Ethereum prices are poised for a major rally as outflows from exchanges surge, causing exchange supply to drop to its lowest level in five years.
Ethereum prices jumped to $1,750 on Monday, a price level last seen in mid-August. The largest smart contract token has become the focus of the cryptocurrency market as the U.S. Securities and Exchange Commission (SEC) races to approve an Ethereum futures exchange-traded fund (ETF). However, the uptrend encountered resistance, resulting in a drop back to the $1,600 range.
Bearish sentiment on ETH continues to intensify, with the coin remaining relatively unchanged over the past 24 hours, trading at $1,645 on Friday. Bulls must rally following Ethereum price to prevent another drop below $1,600.
Why Ethereum Price Could Explode in Q4 2023
The cryptocurrency market tends to perform well in the last quarter of each year, with the exception of 2022 due to the collapse of the FTX exchange. Investors have begun to look forward to the bullish October, which is known as "Uptober."
Analysts and traders such as Altcoin Sherpa believe that the fourth quarter of 2023 is when Ethereum and other altcoins will shine.
“I expect explosive growth in Q4 or Q1, which is always going to happen,” said Altcoin Sherpa via X. “It’s arguably the best time of the year to trade.”
Looking at the ETHBTC price chart, the trader said he expects Ethereum prices to rebound strongly.
On-chain analysis platform Santiment revealed that on Wednesday, 110,000 ETH left exchanges, "the largest outflow since August 21." Non-exchange ether subsequently surged to a record high of 115.88 million ETH, while the supply of tokens on exchanges fell to a five-year low.
Ethereum price seeks higher support
Ethereum has been endlessly searching for support to control its downside since being rejected at $1,750 earlier this week. The 21-day exponential moving average (EMA) (red) at $1,641 must hold in place as immediate support, otherwise, this search will extend to $1,600.
The Relative Strength Index (RSI) maintains its downtrend, retesting the mid-line support. Traders interested in shorting Ethereum must check if the RSI continues to fall towards the oversold territory below 30.
Meanwhile, bullish traders should consider the possibility of Ethereum price rebounding from the support provided by the current descending channel. A retest of previous resistance is often interpreted as bullish.
On the upside, a break above the $1,750 resistance level means that Ethereum is holding above all key moving averages, including the 21-day, 100-day, and 200-day moving averages. Such a position goes a long way in locking in an uptrend, thereby encouraging traders to consider going long on ETH for a bigger breakout towards $2,000.