“Black Monday” rocked the short-term Ethereum price outlook, but supply on exchanges has now fallen to its lowest since mid-2024, setting the stage for a potential supply squeeze.
Ethereum’s place in the “best crypto to buy” conversation has been under pressure, down more than 60% from its all-time high just four months ago in the aftermath of “Liberation Day.”
Recession fears bolstered by Trump’s aggressive “tariff war” have sparked mass liquidations across investment markets—hitting Ethereum particularly hard.
Yet, while sellers dominate near-term price action, underlying metrics suggest Ethereum could be gearing up for a powerful rebound.
Is Ethereum in For a Short Squeeze?
According to CryptoQuant data, Ethereum exchange reserves have been steadily declining since late 2022—a trend that signals a continued reduction in available supply on centralized platforms.
Ethereum exchange reserves across exchanges. Source: CryptoQuant.Investors appear to be moving assets into cold storage in an effort to reduce sell-side pressure—hinting at long-term conviction.
While it hasn’t translated into upward price action yet, the groundwork for a supply squeeze is being laid.
Once demand returns and price consolidates, this thin exchange supply could act as rocket fuel for a sharp rally.
ETH Price Analysis: Ether Breaks 5-year Support
Despite these underlying bullish metrics, Ethereum has lost critical historical support that marked every major bottom since mid-2020.
ETH / USDT 1-week chart, 2020 support zone break. Source: Binance.This breakdown breaches the lower boundary of a massive symmetrical triangle pattern—a final line of defense before deeper losses set in.
While much of these losses have already materialized, the next key support sits at $1,050. That marks a potential 30% slide before buyers are likely to return.
This scenario holds weight, with the MACD line accelerating its move away from the signal line, underscoring dominant selling pressure.
While the Relative Strength Index (RSI) has hit the oversold threshold at 30—a sign of seller exhaustion—a pronounced reversal seems unlikely amid the broader bearish market.
This New ICO Also Poses a Threat to Ethereum
Those who jumped to tried-and-tested Ethereum over alternative Layer-1s may be forced to reconsider as Solaxy ($SOLX) fills a critical gap in the Solana ecosystem.
Solaxy is Solana’s first-ever Layer-2 scaling solution, attracting over $29 million in one of the biggest presales right now.
By processing transactions off-chain and finalizing them on Solana, Solaxy significantly reduces congestion and lowers transaction costs, while offering seamless interoperability across both blockchains.
When demand returns, it could be the one reaping new retail liquidity, boosted by a high 139% APY on staking to reward early adopters.
You can keep up with Solaxy on X and Telegram, or join the presale on the Solaxy website.
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