Following a rejection at $4,946 on August 24, Ethereum (ETH) is now trading in the low $4,000 level. However, some analysts are still hopeful that ETH is likely to surge beyond $5,000 in the coming weeks, thanks to its rising illiquid supply and positive exchange-traded fund (ETF) momentum.<\/p>\n
According to a CryptoQuant Quicktake post by contributor Arab Chain, Ethereum\u2019s latest upswing in August which pushed the digital asset from a range of $3,700 \u2013 $4,000 to its latest all-time high (ATH) of $4,946, was largely buoyed by broader market rally and positive ETF inflows.<\/p>\n
The analyst noted that ETH reserves on Binance crypto exchange witnessed a sharp uptick in August. The quick surge in inflow of tokens to the exchange shows that holders are choosing to sell or take profits at higher prices.<\/p>\n
Arab Chain shared the following chart which shows both liquid (green) and illiquid (beige) ETH supply. According to the chart, the vast majority of ETH supply remains illiquid, creating a structural supply shortage.<\/p>\n
On the other hand, the chart shows a slight increase in the liquid supply, suggesting that a portion of ETH has returned to circulation and could add to short-term selling pressure. The analyst remarked:<\/p>\n
The overall illiquidity of the supply reinforces the long-term bullish outlook. Short-term cautionary signals \u2013 rising Binance reserves combined with a small increase in liquid supply \u2013 suggest a potential correction after the recent strong upswing.<\/p>\n
If the growth in ETH reserves on Binance shows signs of slowing down or withdrawals resume, the digital asset\u2019s supply shortage will remain pronounced. Consequently, a clear and decisive break above the $4,800 resistance level could propel ETH toward $5,200 \u2013 $5,500 in the near term.<\/p>\n
The CryptoQuant analyst concluded by saying that September is likely to witness sideways to a slightly bullish move for ETH between $4,300 to $5,000. However, a failure to break through the $4,800 level \u2013 coupled with rising exchange reserves \u2013 could raise the possibility of a correction to $4,200.<\/p>\n
While a breakout above $4,800 is possible, some analysts are tempering their expectations by saying<\/a> that ETH may test the psychologically important $4,000 level before resuming its uptrend.<\/p>\n Meanwhile, on-chain data shows whales accumulating ETH at record pace. According to a recent report, ETH whales added<\/a> a whopping 260,000 ETH to their wallets on September 1.<\/p>\n