Ethereum's Exchange Supply Ratio Drops 32.24% as Short Liquidations Surge

Ethereum’s market dynamics are currently indicating a potential bullish breakout, driven by a reduction in supply on exchanges and a growing investor sentiment. The Exchange Supply Ratio for Ethereum has dropped, signaling reduced sell-side pressure and suggesting potential price growth. Additionally, short liquidations have outpaced long liquidations, increasing the chances of a short squeeze and a subsequent price surge.

Network activity for Ethereum shows encouraging trends, with the number of New Addresses increasing by 32.24% over the past seven days, indicating growing investor interest. Active Addresses have also risen by 6.96%, confirming strong participation from current holders. The Zero Balance Addresses have climbed by 120.50%, showing that retail sentiment remains high. Although many investors have yet to take significant positions, Ethereum’s adoption continues to expand, supporting a continued upward trajectory for ETH.

Analysis of recent short liquidations showed that $2.15 million in total liquidations occurred, with a significant portion coming from major exchanges. If ETH breaks above $1,900, short liquidations could accelerate, fueling a potential short squeeze. Such a move would add momentum to any rally, especially if liquidity hunters force market participants to cover their shorts.

Ethereum saw significant outflows from exchanges, with -4,211 ETH flowing out as of press time. This trend points to increased confidence among holders, who appear content keeping ETH off trading platforms. With fewer tokens for sale, the setup favors further bullish continuation. Ethereum’s Funding Rate remains positive at 0.00543%, signaling a bullish market sentiment. The number of long positions exceeds short positions, indicating that investors are confident in Ethereum’s price action. The positive Funding Rate reflects the market’s optimism, aligning with Ethereum’s potential for further price increases.

Ethereum is forming a head and shoulders pattern, with key support around $1,758 and resistance at $1,836–$1,850. If Ethereum breaks through this resistance, the price could target $2,000, marking an 8.9% potential gain. The volume trend is increasing, supporting the likelihood of a breakout. If Ethereum surpasses this critical resistance, it could trigger a sharp rally towards $2,000. The head and shoulders pattern suggests a bullish continuation if the neckline is breached.

Conclusively, ETH’s Exchange Supply Ratio decline, strong network activity, and liquidity pool formations point to a bullish outlook. The head and shoulders pattern and increasing short liquidations support the likelihood of a breakout toward $2,000. With a positive Funding Rate and reduced sell-side pressure, ETH is positioned for continued upward momentum, potentially reaching higher targets in the near future.