Ethereum is finding it increasingly difficult to maintain a compelling bullish narrative as market sentiment continues to deteriorate. Price action remains fragile and a growing number of analysts are openly discussing the possibility of Ethereum entering a broader bear market phase.
Repeated failures to maintain bullish momentum have weakened confidence, while risk appetite in the crypto market continues to fade. As volatility persists and capital moves defensively, ETH finds itself at the center of a debate between structural price weakness and resilience beneath the surface.
According to a recent CryptoQuant report, the current state of Ethereum reflects a notable change in supply behavior on exchanges. The Exchange Supply Ratio (ESR), which tracks the proportion of ETH held on centralized trading platforms, is steadily declining across all major exchanges.
This trend indicates that a smaller portion of the circulating supply is readily available for immediate sale, a critical factor when assessing supply and demand dynamics.
Historically, falling FX balances suggest a reduction in selling pressure as investors place their assets in custodial or long-term storage rather than preparing for liquidation. In the current context, this structural change adds nuance to the bearish narrative.
Fall in foreign exchange supply signals structural change
The report highlights a pronounced decline in Ethereum’s supply exchange rate (ESR), reinforcing the idea that supply dynamics are evolving quietly beneath the surface. Across all platforms, ESR fell to around 0.137, one of its lowest levels since 2016.
This sustained decline reflects a steady outflow of ETH from exchanges to external wallets, signaling a lesser propensity to sell immediately and a growing preference for holding for the long term. Historically, similar patterns have emerged during reaccumulation phases or transition periods that follow prolonged volatility, often preceding more stable price behavior.
The trend is even more evident on Binance, where the ESR has fallen to around 0.0325. As the exchange with the most liquidity, Binance balances serve as a key barometer for near-term supply conditions. The current removal of ETH from wallets suggests a significant reduction in salable spot supply, indicating increased caution by traders rather than aggressive distribution.
At the same time, Ethereum is trading near $2,960, an average level that reflects a temporary equilibrium between buyers and sellers. The combination of falling FX supply and relatively stable prices indicates that the market is not under strong selling pressure.
Instead, it appears to be entering a phase of liquidity absorption and strategic repositioning, in which participants reduce their exposure to short-term trading while preparing for a potential change in market structure.
Ethereum Price Struggles Below Key Trend Levels
The daily ETH chart highlights a market that remains structurally fragile despite short-term stabilization. After failing to sustain above the $3,200-$3,300 region, Ethereum continued to post lower highs, confirming a loss of bullish momentum since late October. The price is currently trading around the $2,850-$2,900 area, an area that has served as a pocket of short-term demand but lacks strong follow-through from buyers.
From a trend perspective, ETH remains below its short- and medium-term moving averages. The 50-day moving average has reversed and is now acting as dynamic resistance, while the 100-day moving average is also trending lower.
The 200-day moving average is higher, reinforcing the idea that Ethereum has moved from a trending market to a correction or distribution phase. As long as prices remain capped below these levels, rallies will likely be stunted rather than prolonged.
The dynamics of volumes reinforces this point of view. Recent rebounds have occurred on relatively moderate volume compared to the sell-offs seen during previous outages, suggesting reactive short-selling coverage rather than new demand.
Structurally, ETH must recover and hold above the $3,100-$3,200 range to rebuild a bullish scenario. Otherwise, the risk remains tilted towards continued consolidation or a deeper correction towards lower support levels.
Featured image from ChatGPT, chart from TradingView.com
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