Ethereum News Today: Ethereum's Supply Crunch Tests $4.95K Threshold: Will Demand Fuel a Rally?

Ethereum's supply dynamics have intensified as on-chain metrics signal a tightening liquidity environment, with the 30-day simple moving average (SMA) of netflows remaining below zero since late 2023. This sustained outflow from exchanges, coupled with slowing short-term withdrawals, has reduced the immediate supply available for spot trading, bolstering the case for a potential supply-driven rally if demand from staking, decentralized finance (DeFi), or institutional exchange-traded fund (ETF) inflows accelerates. The 30-day SMA of netflows, a key indicator of medium-term supply contraction, remains in negative territory, while weekly exchange balance trends have shown a steady decline, reinforcing the narrative of reduced selling pressure.

Exchange liquidity has further contracted, with Ethereum's exchange supply ratio (ESR) dropping to 0.139, a historically low level compared to previous bull cycles where ESR peaked near 0.30. This reduction in liquidity aligns with growing institutional and whale accumulation, as large holders move ETH to cold storage or staking protocols. On-chain analytics from platforms like CryptoQuant and Santiment reveal a net outflow of 246,000 ETH from exchanges in recent weeks, signaling long-term positioning rather than speculative trading. Meanwhile, Ethereum's circulating supply has seen a deflationary effect from staking, with over 35.6 million ETH locked in smart contracts as of Q2 2025, representing 29.5% of the total supply.

The $4,950 price level has emerged as a critical technical threshold for Ethereum. A sustained close above this resistance could trigger a rally toward $6,000–$8,000, contingent on volume expansion and institutional participation. Historical data suggests that breakouts above key resistance levels with rising volume often correlate with ETF-driven demand. Conversely, a failure to breach $4,950 could see the price consolidate near $4,400 support, where it has found a floor in recent months. The market attempted a breakout two months ago but failed to sustain momentum, underscoring the need for stronger buyer conviction.

Institutional demand has surged, with Ethereum-focused ETFs recording $80 million in net inflows over three consecutive days in October 2025. This trend aligns with broader regulatory shifts, including streamlined ETF approval processes in the U.S., which have encouraged asset managers to launch new products. Additionally, corporate treasuries have added 5.829% of their ETH holdings in Q2 2025, with firms like BitDigital and SharpLink Gaming accumulating 100,000 and 216,000 ETH, respectively. These developments, combined with the anticipated legalization of stablecoins under the GENIUS Act, could further amplify Ethereum's appeal as a yield-generating and infrastructure-grade asset.

However, risks remain. While ETF inflows and whale accumulation have reduced circulating supply, outflows from spot ETFs have reached $389 million in October 2025, indicating waning institutional confidence. Additionally, the on-balance volume (OBV) for ETH has trended downward since September 12, 2025, signaling weak spot demand and heightened downside risks. If bearish momentum intensifies, Ethereum could test support near $3,875. Conversely, a breakout above $4,211 resistance could pave the way for $4,497 and beyond.

The interplay between supply and demand will be pivotal in determining Ethereum's trajectory. With staking inflows growing and exchange withdrawals persisting, the effective liquid supply could tighten within weeks. Traders are advised to monitor weekly exchange balance trends, staking deposit rates, and volume dynamics on any breakout attempt. Analysts remain cautiously optimistic, with some projecting ETH to reach $6,400–$12,000 by year-end 2025, driven by sustained institutional inflows and a deflationary supply model.

[1] Ethereum Could Face Supply Squeeze as 30-Day Netflows Remain Below Zero and $4.95K Resistance Looms (https://en.coinotag.com/ethereum-could-face-supply-squeeze-as-30-day-netflows-remain-below-zero-and-4-95k-resistance-looms/)

[2] Is Ethereum Setting Up for a Supply Shock in 2025? (https://coinpedia.org/price-analysis/is-ethereum-setting-up-for-a-supply-shock-in-2025/)

[3] How Far Will ETH Price Fall From $4,000 in October 2025? (https://beincrypto.com/what-to-expect-from-ethereum-october-2025)

[6] Ethereum Breaks Key Resistance: Will ETF Inflows Help ETH Sustain Above $4,300? (https://cryptoinsightfull.com/index.php/2025/10/04/ethereum-breaks-key-resistance-will-etf-inflows-help-eth-sustain-above-4300/)

[7] Ethereum Turns 10 - Will ETH Price Breakout to $4k Next? (https://coinpedia.org/price-analysis/ethereum-turns-10-will-eth-price-breakout-to-4k-next/)

[8] Ethereum Staking Explodes in 2025: Institutional Inflows and Whale Activity Drive Supply Squeeze (https://www.financialcontent.com/article/marketminute-2025-9-9-ethereum-staking-explodes-in-2025-institutional-inflows-and-whale-activity-drive-supply-squeeze)

[9] 3 Reasons Why Ethereum Could Surge in October 2025 (https://www.analyticsinsight.net/cryptocurrency-analytics-insight/ether-hits-4k-again-3-reasons-eth-price-could-surge-in-october-2025)

[10] Ethereum Set for Q2 Breakout with Strong DeFi and ETF Demand (https://beincrypto.com/ethereum-q2-bullish-momentum/)