Ethereum’s price has been on a roll after it moved past a crucial resistance barrier. If the bulls can sustain the recent run-up, there is a good chance ETH will revisit $4,000 with more opportunity for gains.
Significance of the $3,150 level for Ethereum price action
ETH is up 34% in the past two weeks and shows no signs of stopping as it retested the $3,150 level for the 10th time in the past two months or so. Interestingly, the price of the altcoin has had a volatile relationship with this barrier and the recent movement above speaks to this connection.
The first time Ethereum’s price hit $3,150 was in May 2021 and the three-day candlestick saw 23% returns as it moved above the said level. Since then, any move – above or below relative to $3,150 – has seen immense volatility, causing massive gains/losses.
The most recent downward break of this level was in January, which resulted in a loss of -18% on a single three-day candlestick. Now that the price has moved back above this level, investors can expect a similar outlook to unfold. Assuming history repeats itself, investors can expect ETH to retest $3,600.
However, if bulls manage to flip this hurdle into a support level, there is a high chance this uptrend will continue until Ethereum’s price hits the $4,000 psychological level.
Identify what the offer looks like
The supply on the exchanges is supporting this massive explosion in the price of ETH. This metric tracks the number of ETH held on centralized entities and is used to determine potential sell-side pressure.
Therefore, a massive inflow of ETH to such platforms often depicts investors’ interests and serves as a proxy for their investments. For ETH, however, the number of tokens on exchanges has been on a downtrend since May 2021, decreasing from 22.09 million to 15.64 million.
This drop indicates a net outflow of 6.45 million and effectively denotes a drop in sell-side pressure. Therefore, market participants, especially long-term holders, are optimistic about the price performance of ETH.
To add to the already bullish narrative for ETH is the upcoming event known as the “Merge,” which is the migration of the Ethereum blockchain from proof-of-work to proof-of-stake. Such a development will cause validators and investors to stake their ETH to earn interest, further reducing the selling pressure available on exchanges.
