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Compiled by: Vernacular Blockchain
1. Ethereum’s scarcity increases: Will a supply crunch trigger a price rally?
Ethereum is becoming increasingly scarce on cryptocurrency exchanges, with its supply falling to its lowest level since November 2015. According to the latest data, only 8.97 million ETH remain on the exchange, a clear sign that more investors are choosing to hold assets rather than trade them easily.
With many holders moving ETH to cold storage, DeFi protocols, or staking rather than selling, confidence in the long-term value of this particular cryptocurrency is rising, thanks to changes in trading trends. However, this supply shortage comes at an interesting time, given the sharp drop in Ethereum prices in recent months. Some believe that market conditions and competitive pressures are weighing on ETH, while others believe that fewer coins on trading platforms may eventually push prices higher . Now, everyone is closely watching where Ethereum goes next.
2. Why is the supply of Ethereum shrinking?
One of the main reasons for Ethereum's withdrawal from trading platforms is the rapid expansion of decentralized finance (DeFi). More and more investors are choosing to transfer ETH to DeFi platforms in order to leverage their assets through borrowing, staking, or earning rewards. Many people no longer just keep ETH in their trading platform wallets, but choose to pursue higher yields and passive income opportunities.
The advent of staking is a major game changer. Since Ethereum switched to Proof-of-Stake, holders can now choose to lock up their cryptocurrency to support network security in exchange for rewards. Due to this major shift, a large amount of ETH is no longer in circulation, further reducing the amount of ETH available to investors on trading platforms.
3. ETH price falls despite supply reduction
Typically, a reduction in the supply of any asset would drive up its price due to scarcity. However, Ethereum has defied this expectation. ETH prices have fallen nearly 45% from their December highs, trading at around $1,899 on March 21. Despite the reduction in supply, Ethereum has been one of the weakest performing major cryptocurrencies in recent months. There are multiple factors that have contributed to the price drop, including broader market uncertainty, shifting investor sentiment, and growing competition from alternative blockchain networks.
4. Analysts adjust Ethereum price predictions
As market conditions continue to change, financial analysts are also adjusting their expectations for the future of Ethereum. Standard Chartered, one of the world's major banks, has lowered its year-end ETH price target to $4,000, a significant cut from its previous forecast of $10,000. This clearly shows that people are increasingly concerned about Ethereum's changing landscape , including growing competition from Layer-2 solutions and rival blockchain networks.
Despite the forecast adjustments, investors still have strong confidence in Ethereum’s long-term potential. The big question now is whether new developments like staking-based ETFs or upcoming network upgrades can restore investor confidence and provide Ethereum with the impetus to return to its previous bullish expectations.
5. Recovery is coming?
Although Ethereum has been struggling recently, a few factors could help it rebound. One major possibility is the launch of a staking-based Ethereum ETF. If regulators approve an ETF that allows institutions to directly stake ETH, it could attract a large wave of new investors. This would increase demand for Ethereum and could even push up its price. Right now, one of the most important things to watch is the amount of Ethereum available on trading platforms. With fewer ETH tokens available for trading, some believe this "supply crunch" could lead to higher prices.
