Ethereum price is facing resistance at $3K, but data currently supports ETH bulls

Ether (ETH) is currently struggling with the $3,000 resistance level following an impressive 29.7% gain from February 6th to February 20th. Analysts attribute ETH's recent gains to a shrinking supply. ) applications, and the reduction in availability caused by the network's authentication burn mechanism.

While Ether's rally to $3,000 has been impressive, the real question is can the altcoin finally gather enough strength to reach the $3,300 level seen in March 2022?

Ethereum has yet to see a season of demand.

When this happens, we do not know how much the price will go.

So much ETH in staking, and reaking, and defi, and burning this cycle – no new supply.

Add to that ETF?

There isn't enough ETH to go around.

— RYAN SΞAN ADAMS — rsa.eth (@RyanSAdams) February 15, 2024

Crypto investor Ryan Sean Adams shares insights on the X social network, pointing out that “Ethereum hasn't even reached its prime.” Adams speculates that the introduction of a spot ether exchange-traded fund (ETF), especially in the absence of “new supply,” could raise its price. According to ultrasound.money, the supply data clearly shows a total decrease of 18,960 ETH in the coin circulating in the last 30 days. It's important to note that this metric does not reflect ETH available for sale, which can be measured using net deposits on exchanges.

Looking at the 7-day trend, there is a preference for net withdrawals from February 15, although this could easily change as seen in early January. Contrary to expectations, Ether's price was relatively stable at $2,300 in the 30 days to January 5, suggesting that whatever triggered the sell-off was not directly related to the price rally. Basically, the volatility of demand for shares and ETH in decentralized applications does not seem to directly affect the supply available for sale.

Technically, the ETF's approval could trigger a rally in Ether's price, with analysts estimating the odds of approval between 50% and 80%, leaving room for a positive surprise. However, if Bitcoin (BTC)'s bullish momentum weakens, the likelihood of Ether consolidating above $3,300 will decrease, as institutional investor inflows may not be enough to drive the price. Additionally, the historical correlation between BTC and ETH prices is still interesting.

There is no certainty that the historical trend will continue, especially with the bullish momentum that can come from the spot Ethereum ETF, but a sustained divergence between the price of Bitcoin and Ether has been unusual over the past 9 months.

Instead of fixating on the expected ETF decision in May, traders should examine other indicators such as weather snapshots and overall demand for the Ethereum network.

To illustrate, enthusiasm for the upcoming Ethereum token has faded after the airdrop of Starknet (STRK), the highly anticipated layer-2 token, down 60% since February 20th. Infrastructure organizations like Nethermind. Moreover, there was criticism of participants who were deemed ineligible for the distribution and 13 percent of the controversy that arose two months after the offering began.

To gauge whether professional traders are taking a bullish stance on the price of Ether as they struggle with $3,000 support, one should analyze the price of monthly ETH futures contracts compared to regular spot markets. In independent markets, these instruments sell at a premium of 5% to 10% to accommodate their extended settlement period.

Related: Starknet's airdrop is largely successful despite controversies.

Note that Ether's 1-month futures premium has remained above 14% since February 17, showing no signs of abating in buying interest. Furthermore, although volatility is suggested, the measure falls short of the over-optimism seen in the 25% premium since January 2. The data suggests that Ether bulls don't have to worry about supply on exchanges or use in futures markets. ETH's break above $3,300 is still compelling.

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