The total amount of Ether (ETH) held by all crypto exchanges has dropped to its lowest level, just as the price soared above $ 3,000 per token on September 23.

Data collected by CryptoQuant, a blockchain analytics platform, shows that the exchange’s net Ethereum token reserve has fallen from 23.92 million ETH a year ago to 18,533 million ETH. Meanwhile, the cost of buying an Ether has risen from nearly $ 349 to $ 3,078, showing a negative correlation between ETH reserves on exchanges and price.

Supply and demand factors

Lower foreign exchange reserves indicate the likelihood that traders will hold onto the underlying cryptocurrency rather than exchange it for other digital / fiat assets. So if the demand for the token tends to increase, the lack of an adequate supply will help increase the price.

So it seems that Ethereum’s native token has started to blend in with the classic bullish pattern of high-low offers. For example, Dapp Radar reports that Total Value Locked (TVL) in the decentralized application industry hits $ 142 billion, of which 68% is focused on the Ethereum network as of August 2021.

On the other hand, more and more Ether tokens are running out after Ethereum announced the staking function in November 2020, as the network wants to become a fully-fledged proof-of-stake blockchain by November 2020. Year 2022.

Specifically, the TVL has grown in the so-called Ethereum 2.0 Smart Contract from 11,616 ETH in November 2020 to 7.75 million ETH today.

In addition, a major network upgrade on August 5, 2021, known as the London Hard Fork, added a feature that reduces the rate at which Ether supply increases. The change, named EIP-1559, begins to split the nearly 13,000 new ETH released every day into three parts.

The network begins to burn one of those splits – the basic fee users pay miners to process transactions. As a result, more ETH tokens have run out. Data tracking portal WatchTheBurn.com notes that the EIP-1559 feature has so far contributed to the burning of 352,262 ETH, which is about $ 1.1 billion at current exchange rates.

Lark Davis, an independent crypto market analyst, has stated that the continued supply and demand momentum in the Ethereum market will help drive ETH price towards $ 10,000.

#Ether The supply on the stock exchanges continues to decline and prices continue to rise. $ 10,000 preprogrammed. pic.twitter.com/jRTUYHK4Ca

– Lark Davis (@TheCryptoLark) 17.09.2021

Macro effect

The crypto market worked this week in response to the real estate crisis lurking in the Chinese real estate sector and its impact on global economies.

Specifically, the ETH / USD rate fell 20.78% to as low as $ 2,651 in the first two days of this week as investors limited their exposure to riskier markets and looked to other safest havens like the US dollar and government bonds. Fear of contagion from the debt crisis at China’s Evergrande Group, which owes billions in bonds to global investors, triggered the sell-off.

Ether has rebounded up to 18.82% after bottoming domestically at $ 2,651, including a 2.33% increase to $ 3,150 on Thursday. However, the 50-day exponential moving average (50-day EMA) near $ 3,191 and the 20-day EMA near $ 3,291 act as strong resistance targets.

Related: Ethereum Forms Double Top? ETH price loses 12.5% ​​amid fears of Evergrande contagion

Blockchain data tracking service Santiment points out that the Ethereum token can continue to rise as long as its short-term holders remain unprofitable. The portal quotes the ratio of market value to actual value (MVRV) – calculated on the seven-day average – behind its bullish analogy.

Extract from Santiment’s Wednesday report:

“In the short term, the MVRV 7D is showing a recovery, but a real recovery is unlikely until we get closer to the next major speculative event – the transformation – to Proof-of-Stake (PoS) by 2022.”