Why is Ether (ETH) price up today?

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The price of Ethereum’s Ether (ETH) has risen by approximately 4.5% in the last 24 hours to reach $3,500 on March 25. This rebound is part of a larger recovery trend, with Ether gaining about 14.5% from its local low of around $3,050 on March 20.

ETH/USD daily price chart. Source: TradingView

Let’s delve into the factors that have influenced Ether’s price gains in recent days.

Return of Ethereum whales

Ether’s latest gains precede a period of accumulation among its richest investors, also known as whales.

According to data resource Glassnode, entities holding between 1,000 and 10,000 ETH have increased their Ether reserves by approximately 1.15% in March. Recently, this accumulation pattern has often been a precursor to significant price surges, as shown below.

Ethereum whale net position change (1K-10K ETH). Source: Glassnode

Moreover, these accumulation phases have coincided with price declines, suggesting that large-scale investors are currently buying dips, expecting the price to resume its upside.

ETH’s supply is receding

Today’s uptick in Ethereum’s price is closely linked to two key on-chain metrics indicating a reduction in ETH’s circulating supply.

The percentage of Ether supply locked in its smart contracts has surged to 36.47%, marking the highest level recorded as of March 5.

Ethereum percent of supply in smart contracts. Source: Glassnode

This locking up reduces the circulating supply available for trading, potentially putting upward pressure on price. 

To illustrate, the net change in Ether’s supply over a week was approximately -4,000 ETH as of March 25, highlighting a tangible decrease in circulating supply over the past week that could support upward price movement.

Ethereum’s net supply change on seven-day timeframe. Source: Ultrasound Money

Second, Ether’s recovery since March 20 aligns with the declines in ETH reserves across all crypto exchanges, as shown below. This trend indicates a growing preference among traders to retain their ETH, opting for long-term holding rather than exchanging it for other assets.

Ethereum balance across all exchanges. Source: Glassnode

Rate cut anticipations

Ethereum’s ongoing price gains mirror similar rebound moves across the crypto market amid signals that the Federal Reserve and its major global counterparts will likely start cutting interest rates by June. 

Target rate probabilities for June from the current 525-550 basis point range. Source: CME

Lower interest rates typically reduce the yield (or return) on government bonds, which investors consider as one of the safest investments. This makes bonds less attractive to investors seeking higher returns. In turn, they shift their capital to riskier assets, such as stocks and cryptocurrencies.

Related: Goldman Sachs hedge fund clients are piling back into crypto this year

The Fed hasn’t hiked interest rates since July 2023. Since then, the price of Ether has jumped by over 108%. Similarly, the crypto market’s valuation on the whole has rallied 114% in the same period, fueled further by the approval of spot Bitcoin exchange-traded funds (ETFs) in the U.S. 

TOTAL crypto market weekly performance chart. Source: TradingView

Technical ETH price rebound

Ether’s price started rebounding after reaching a support confluence comprising its 50-day exponential moving average (50-day EMA; the red wave in the chart below) at $3,270 and its 0.382 Fibonacci retracement line at around $3,125.

ETH/USD daily price chart. Source: TradingView

At the time of Ether’s bounce, its RSI was around 50, indicating a balanced or neutral sentiment in the market. Interestingly, this trend resembles ETH’s bounce in January 2024 (the red bar), which preceded a 90% price rally to around $4,085.

ETH price now eyes a breakout toward $4,000 by April if it decisively closes above its 0.236 Fib line at around $3,500. As mentioned above, failing to do so would risk a sharp pullback toward the support confluence area.

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

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