ETH Reserves on Crypto Platforms Reach Decade Minimum: Will Ethereum Prices Rebound?

The quantity of Ethereum held on exchanges has reached its lowest level since November 2015, with only 8.97 million ETH accessible

Based on a study by Santiment on Mar. 21, this decrease is mainly due to the increasing demand for decentralized finance and staking. There is less selling pressure as more investors choose to lock up their assets instead of keeping them on exchanges. Over the last seven weeks, the supply of Ethereum's (ETH) on exchanges has shrunk by 16.4%, indicating a long-term accumulation trend.

However, this scarcity of supply has not yet benefited Ethereum's price. ETH has dropped 47% from its December high of $4,105 to its current price of $1,990 as of Mar. 21, making it one of the worst-performing major cryptocurrencies.

Both on-chain and technical indicators suggest further declines. Standard Chartered analysts recently lowered their year-end ETH price target from $10,000 to $4,000, citing increased competition from other networks, especially Ethereum layer-2s.

Layer-2 networks are attracting more users due to their lower fees, which is reducing mainnet activity. According to DeFiLlama data, the past week's volume processed by Ethereum-based DEX protocols was $9.8 billion, with $5.67 billion handled by Arbitrum (ARB) and Base alone.

Monthly DEX volume on Ethereum has dropped from $92 billion in December to $82 billion in February, with even lower volumes expected in March. This decrease in mainnet usage has affected Ethereum's fee revenue, which is an important aspect of its economic model. Ethereum's fee revenue has significantly decreased from $218 million in December to just $46 million in February.

Although transactions have become less costly due to the Dencun upgrade, which reduced gas fees by 95%, Ethereum's revenue continues to decline. As of press time, Ethereum's total value locked has also dropped from $76 billion in December to $46 billion.

A possible solution for Ethereum could come from the staking of exchange-traded funds. Both the New York Stock Exchange and Chicago Board Options Exchange have submitted requests to the U.S. Securities and Exchange Commission to allow staking in Ethereum ETFs. However, institutional interest is still low, as evidenced by the $370 million in outflows from Ethereum Spot ETFs over the previous month.

From a technical perspective, Ethereum continues to decline and is facing resistance at $2,042. The 50-day moving average is also acting as a barrier, and the Bollinger Bands indicate low volatility, suggesting consolidation.

According to the RSI, which is at 41.22, ETH is recovering from oversold conditions, but it lacks significant momentum. While weak volume indicates trader uncertainty, a slight uptick suggests some accumulation.

If ETH breaks above $2,042, the next targets are $2,163 and $2,370. However, if $1,986 is not maintained, there may be a decline toward $1,714, where previous buying interest has emerged.