Why is ETH hovering around $3000? Exchange supply hits historic lows, indicating a potential rally brewing

Key Points

• Exchange ETH supply drops to a historic low of 8.8%, signaling a tightening liquidity environment
• Fusaka upgrade expands data availability eightfold via PeerDAS, unlocking growth potential for layer-two networks
• Whale high-leverage positions near the $3020 Fibonacci support trigger market volatility

Supply Crisis During Market Consolidation: From Scarcity to Uptrend

Ethereum has been trading slowly between $2950 and $3050, with a 24-hour change of -0.80% and a 7-day decline of 7.63%. But behind this correction, an overlooked signal is flashing.

Exchange-held ETH reserves have fallen to 8.8%, a level not seen since 2015. Since July, exchange outflows have totaled 43%. What does this mean? On-chain analysis firms indicate that over 43% of ETH is now locked in staking, DeFi contracts, re-staking cycles, long-term custody, and institutional vaults.

This structural contraction on the supply side has played out before in the 2021 ETH bull market. Back then, tight supply combined with strong buying pressure drove a +300% rally. The similarity in history is enough to alert market participants.

Fusaka Upgrade: From Bottleneck Expansion to Network Transformation

Launched on December 3, the Fusaka upgrade opened a new chapter for Ethereum’s scalability. PeerDAS (Peer-to-Peer Data Availability Sampling) expanded layer-two data availability by 8 times, while reducing node storage and transaction costs.

On-chain activity data already reflects this change—new developer and user activity is trending upward. Historical precedents like Dencun (2024) suggest that such upgrades often lead to a strong upward cycle after network efficiency improves.

To truly assess the long-term impact of this upgrade, monitoring layer-two throughput is key. Achieving over 12,000 TPS before 2026 could reshape Ethereum’s competitive position.

Whale Play: Market Vulnerability in Leverage Bets

Large capital movements reveal tension and divergence in the market. A top trader opened a long position of 20,000 ETH at $3040, with a liquidation level at $1190—indicating a bullish signal. Yet, another whale suffered a loss of $164,000 on a position of 7925 ETH.

Leverage risk remains high. In the past 24 hours, the entire crypto market saw $295 million in liquidations. This makes the $3036 to $3020 buffer zone a vulnerable spot. Especially since $3020 is close to the Fibonacci 61.8% retracement level, turning it into a “life or death” line.

Breaking below this zone could trigger a cascade of liquidations, while holding above it would reinforce bullish confidence.

Hidden Power of On-Chain Signals: OBV Breakout Indicates Bottom Recognition

Despite the price action being choppy, on-chain indicators tell a different story. The On-Balance Volume (OBV) recently broke through previous resistance, forming a technical divergence with the price rejection.

Market observers consider OBV “one of the most reliable leading indicators.” Such divergence often signals that buying pressure is accumulating beneath the surface. Based on current price behavior, the structure remains constructive, and a rebound to higher levels is still possible—before a deeper correction occurs.

Contradictory Capital Flows

Market sentiment shows clear divergence. Spot ETH ETFs have recorded a net outflow of $75.2 million, continuing the large-scale withdrawal of $140 million since November. On-chain platform Nansen reports that smart money traders are net short by $21 million, adding another $2.8 million in shorts in the past 24 hours.

In contrast, corporate accumulation continues. The world’s largest institutional ETH holder, BitMine, increased its ETH holdings by $199 million over two days, now controlling 3.08% of the total supply. The company’s deployments over the past month totaled $2.13 billion, far exceeding the average activity in the broader digital asset treasury during the same period.

Technical Moving Averages: Pressure and Release

Ethereum is currently hovering near short-term moving averages, but medium- and long-term averages still exert pressure. The EMA100 is at $3528, and the SMA200 is at $3540.5. Trading below these key averages indicates the market is in a compression phase rather than a one-way trend.

Such compression often precedes major breakouts. Once a new catalyst appears, the market could release accumulated energy.

Key Focus Points This Week

Ethereum’s positioning combines structural advantages with short-term caution:

Supporting Bullish Factors

• Historic exhaustion of exchange supply locks in liquidity advantage
• Scalability benefits from Fusaka

Risk Factors

• Continued outflows from ETFs and smart money short positions
• High open interest in derivatives markets
• Market sensitivity to the critical Fibonacci support at $3020

Maintaining stability above $3020 will sustain the bullish outlook into Q1 2026. Falling below this level could increase broader deleveraging pressures, heightening market fragility.